Kajaria Ceramics Ltd. share price target

Kajaria Ceramics’ Q3 revenue rose only 1% y/y to Rs 11.6bn. EBITDA/PAT fell 16.8%/25.4% y/y to Rs1.5bn/Rs777m, below ARe’s Rs1.9bn/Rs 1.2bn.

Kajaria Ceramics (KJC) reported Q3FY25 consol. revenue growth of 1% YoY with tile volume growth of 6.7% YoY (5- year CAGR of 7.2%) and realisation decline of 3.7% YoY (-1.9% QoQ). EBITDA margin shrunk 274bps YoY/69bps QoQ to 12.8% due to higher employee cost, other expenses and lower utilisation of new sanitaryware plant, resulting in 16.8%/25.4% YoY EBITDA/APAT dip.

Weak Q3 on sharp margin contraction due to weak demand in the retail market and high overhead costs of new bathware unit

Kajaria Ceramics (KJC)’s 3QFY25 EBITDA was below our estimate due to lowerthan-estimated revenue and weak realization.

In line with ARe, Kajaria Ceramics’ Q2 revenue grew 5% y/y to Rs11.8bn. EBITDA/PAT fell 12%/22% y/y to Rs1.6bn/Rs843m, below our estimated Rs1.7bn/Rs940m.

We maintain a Buy on Kajaria Ceramics with a revised PT of Rs. 1,600, factoring downwardly revised estimates and considering a healthy earnings growth trajectory in the next three years.

Weak Q2 on sharp margin contraction due to high share of outsourced sales volume and high overhead costs of new commissioned units

Q1 operating profit came broadly in line with our estimates, but missed our APAT estimate by 11.5% on lower other income and higher tax rate

We maintain BUY on Kajaria Ceramics with a revised PT of Rs. 1,700, rolling forward our valuation to H1FY2027E earnings and considering a healthy earnings growth trajectory over the next three years.

Kajaria Ceramics (KJC) has reported Q1FY25 consol. revenue growth of 4.6% YoY driven by tile volume growth of 7.9% YoY (-8.8% QoQ; 5-year CAGR of 6.5%). EBITDA margin fell 90bps YoY (+114bps QoQ) to 15%.

Kajaria Ceramics (KJC)’s consol. revenue grew 5% YoY to INR11.1b (in line). EBITDA dipped 1% YoY to INR1.7b (est. INR1.6b).