Reliance Securities is bullish on Kajaria Ceramics has recommended buy rating on the stock with a target price of Rs 861 in its research report dated September 14, 2017.
Reliance Securities' research report on Kajaria Ceramics
Market leadership in tiles, accelerated macro initiatives, implementation of GST, improved operating leverage and strong new product funnel would be the key growth drivers for Kajaria Ceramics, going forward. We expect the Company to post 13.9% revenue and 19.3% earnings CAGR through FY17-19E. We initiate coverage on the stock with BUY recommendation and Target Price of Rs861, which implies an upside of 21% from the current levels.
We expect Kajaria to post consolidated revenues of Rs28.8bn and Rs33.1bn and net profit of Rs3bn and Rs3.6bn in FY18E and FY19E, respectively. Based on expected EPS of Rs22.6, the stock currently trades at reasonable P/E multiple of 31.5x FY19E earnings. Looking ahead, we expect Kajaria to command premium multiples in coming years on the back of market leadership, superior financial performance and strong new product funnel along with faster consolidation of organised industry under GST regime. We initiate coverage on the stock with BUY recommendation and Target Price of Rs861, based on 34x Sep’19 EPS.
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