Use rally to exit Kajaria Ceramics

Excerpts from Your Stocks on CNBC-TV18 Watch the full show »

Joshi told CNBC-TV18, “It’s really difficult to explain because I have been noticing that a lot of the ceramic plays have been moving up. But that doesn’t really seem enough to justify the kind of interest that we have seen. As far as demand-supply goes ceramics are pretty well placed, I don’t think there is any shortage in terms of tiles and in fact couple of years back probably there was a glut which is why you saw the whole industry go through a bad patch. Now we have an industry, which is growing at a CAGR of about 15% - which is quite good. At the same time the kind of flurry of activities that we have seen recently in almost all stocks is a little strange.” 

She further added, “As far as Kajaria goes the latest numbers are still not out so it’s a little difficult to comment from that point of view. But they do have expansion plans going ahead, they are planning to move into imported tiles and that will probably give them better margins. Their plan is to open 10 stores across the country and 2 are already operational and more will follow. From that point of view their plans looks good, they are also adding capacity. They are trying to target the domestic market as well as the market for imported tiles. In terms of valuations it looks all right. If the investor continues to make money from the levels he has bought he should use that rally to exit because its not a sector that is particularly fancied or you don’t see it getting much fancier valuations than it has already.”