Kajaria Ceramics Ltd. share price target

Revenue for Q2FY18 was ahead of our estimates led by 5% YoY volume improvement and 2% YoY pricing improvement. Operating margins were under pressure due to higher power and other costs. Net profit performance on YoY basis was impacted by fall in margins. Going ahead, we expect company to improve its market share by capturing the market share of unorganized players as well as with improvement in product mix. Its enhanced presence in Tier 2/3/4 cities, strong dealer network, value added products as well as improvement in capacity utilization of its JV plants are expected to aid revenue growth going forward....

ICICI Securities Ltd | Retail Equity Research Kajaria Ceramics' (Kajaria) topline grew 6.7% YoY to | 671.2 crore, marginally better than our estimate of | 652.8 crore led by volume...

Incorporated in 1988, Kajaria Ceramics Ltd. (KCL) is the largest player in domestic tiles industry. The company has a market share of 10% of overall industry and 20% of organised industry. KCL's advertising and marketing strategy over the years has paved the way for the company's strong brand recall.

Volume was ahead of estimate despite GST roll out. Own manufacturing (-1%) & trading business (116%) while JVs volume were down by down 16%. Lower share of own manufacturing impacted overall realisation. Recovery from GST is expected to be gradual, company expects things to normalize in Q3FY18 Gross margin at 64.7% (-320bps yoy) impacted by mix,. EBITDA margins declined 480bps yoy to 16.6% impacted by higher fuel cost and advertising spends We lower our FY18E estimates by 5% and keep FY19E estimate unchanged. Kajaria being a leader in Tiles is well placed to take advantage of recovery in the demand. However,...

We attended Kajaria's analyst meet where the management guided for double-digit volume growth for FY18 (management refrained from narrowing it further). However, management remains positive in the long-term driven by implementation of GST & government's focus on housing and sanitation.

ICICI Securities Ltd | Retail Equity Research Kajaria Ceramics' (Kajaria) topline grew 9.9% YoY to | 719.7 crore marginally better than our estimate of | 689.1 crore mainly on account of volume growth of 10.9% to 19.3 million square metre (MSM) vs. our expectation of volume of 18.2 MSM The EBITDA margin contracted 203 bps YoY to 18.0%. It was below our expectation of 19.1% on account of higher advertisement & promotion spends and hike in gas prices...

Muted Q3FY17; Government Schemes such as Housing-for-All Hold Key for Future: Kajaria Ceramics sales grew at 1.7% in Q3FY17 on YoY basis to reach Rs.6067 Mncompared to Rs.5967 Mn in Q3FY16. With demonetization, the building materialsindustry had badly impacted for a brief period in November month.The management said the November sales fell by 5%, but the demand picked up in December with 6.5% growth and hence the quarter ended with 1.7% positive gains in the total revenues of the firm. The management expects the coming Q4FY17E could witness 5-6% volume growth.

ICICI Securities Ltd | Retail Equity Research Kajaria Ceramics' (Kajaria) topline grew 1.5% YoY to | 605.5 crore. It was well above our estimate of | 508.2 crore mainly on account of volume growth of 0.5% to 15.9 million square metre (MSM) vs. our expectation of volume of 13.5 MSM The EBITDA margin contracted 24 bps YoY to 18.4%. It was above our expectation of 16.8% largely on account of lower-than-expected power and fuel cost (16.7% as percentage of sales vs. our estimate of 18.5%)...

Subdued performance in H1FY17 but expecting higher sales growth inH2FY17E: Kajaria Ceramics showed subdued financial performance in Q2FY17. In Q2FY17, the company posted a revenue growth of 3.2% on a YoY basis at Rs.6301 Mn compared to Q2FY16 of Rs.6104Mn. The management has guided and expecting a 10% volume growth in H2FY17E revenues. They said the demand was sluggish in the months of July and August but picking up from September month anticipating festive season ahead.

Kajaria Ceramics is the largest manufacturer of ceramic/vitrified tiles in India and the 9th largest in the world. It has an annual capacity of 68.60 mn. sq. meters presently, distributed across nine plants - one in Sikandrabad (UP), one in Gailpur (Rajasthan), One in Malutana (Rajasthan), five in Morbi (Gujarat) and one in Vijaywada (AP). Kajaria Ceramics exports to more than 20 countries round the Globe. Kajaria Ceramics manufactures ceramic/vitrified tiles in India. The business activity of the Company falls within one broad business...