Kotak Securities recommended accumulate rating on Kajaria Ceramics with a target price of Rs 730 in its research report dated October 31, 2017.
Kotak Securities's research report on Kajaria Ceramics
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.
We tweak our estimates to factor in H1FY18 performance and arrive at a revised price target of Rs 730 based on 30x FY19 estimated earnings as against Rs 740 earlier. Owing to limited upside from current levels, we downgrade the stock to ACCUMULATE from BUY earlier.
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