Kajaria Ceramics Ltd. share price target

We have revised our FY26/27 earnings estimates upward by 18.0%/13.1% mainly with improvement in margins on account of cost saving with distribution consolidation, integration of tiles divisions and the discontinuation of low margin tiles. We had downgraded our rating to HOLD' from Accumulate', we value the stock at 36x FY27E EPS to arrive at revised TP of Rs1,192 (earlier Rs 1,171). The management has refrained from providing guidance due to prevailing low demand conditions but expects to outperform...

Kajaria Ceramic Ltd.'s (Kajaria) Q1FY26 result was broadly in-line with our estimate on net sales front, however, margins were beat to our forecast. The company undertook various cost saving measures which resulted into betterment of operating margin. The management guided no major capex in near term as demand in domestic market remains subdued. Given uncertainty in the domestic market, the company refrained from giving earnings guidance for FY26. Net sales was marginally up by 0.6% YoY to Rs11bn, while EBITDA came in at Rs1.8bn, higher by 9.3% YoY. The company reported net profit of Rs1.1bn, up...

Kajaria’s Q4FY25 performance was weak on sales volumes as well as profitability fronts and missed our expectations. However, on a positive note, it has gained market share in FY25 as sales volume growth of 6% YoY was ahead of the industry (2% YoY growth).

We have revised our FY26/27 earnings estimates downward by 7.4%/9.1% due to weak demand, the discontinuation of the Kajaria Plywood business, and margin contraction. We had downgraded our rating to Accumulate' from BUY', we value the stock at 30x FY27E EPS to arrive at revised TP of Rs878 (earlier Rs 966). The management has refrained from providing guidance due to prevailing low demand conditions but expects to outperform the industry in FY26. KJC expects margins of ~14% in FY26, However, Q4FY25 margins were...

Weak Q4 on soft demand environment and margin pressure in tile segment; ceased plywood operations due to continued losses

Kajaria Ceramics’ (KJC) 4QFY25 EBITDA was below our estimate due to lowerthan-estimated realization and higher-than-estimated other expenses. EBITDA (including discontinued operation) declined ~28% YoY to INR1.7b (~28% miss) and OPM contracted 3.8pp YoY to ~10% (est. ~13%).

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.

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

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

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.

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.

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