Buy Kajaria Ceramics; target of Rs 1,450: Sharekhan

Sharekhan is bullish on Kajaria Ceramics has recommended buy rating on the stock with a target price of Rs 1,450 in its research report dated May 10, 2024.

Broker Research

May 16, 2024 / 12:00 IST

Buy

26 Aug, 2025 12:21

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Sharekhan's research report on Kajaria Ceramics

Kajaria Ceramics Limited (Kajaria) reported marginally lower consolidated revenues at Rs. 1241 crore (up 3% y-o-y) led by in-line tile volume growth of 5.5% y-o-y while tile realisations remained under pressure (down 4.6% y-o-y and 1.3% q-o-q) due to higher trade discounts amidst sluggish demand. Consolidated OPM, at 13.9%, (down 74 bps y-o-y) negatively surprised (versus our estimate of 16.2%) on account of lower tile realisations. Hence, consolidated operating profit (Rs. 172 crore, down 2.2% y-o-y) and net profit (Rs. 102 crore, down 8.8% y-o-y) came in 16% lower than our estimates.

Outlook

Kajaria is expected to benefit from healthy domestic demand, led by strong demand tailwinds from the realty sector and rising exports over the next 2-3 years. The company targets to grow at higher-than-industry growth rates over the medium term. It continues to invest in branding, sales & distribution and scaling up non-tile businesses. We expect Kajaria to report a revenue/operating profit/net profit CAGR of 13%/18%/21% over FY2024- FY2026E. The stock trades at a P/E of 36x/31x its FY2025E/FY2026E earnings. We retain buy on the stock with a revised price target (PT) of Rs. 1450, factoring downwardly revised estimates, while considering a healthy earnings growth trajectory over the next three years, discounting short-term demand headwinds.

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