Buy Kajaria Ceramics; target of Rs 1,670: Motilal Oswal

Motilal Oswal is bullish on Kajaria Ceramics has recommended buy rating on the stock with a target price of Rs 1,670 in its research report dated July 23, 2024.

Broker Research

July 26, 2024 / 11:51 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on Kajaria Ceramics

Kajaria Ceramics (KJC)’s consol. revenue grew 5% YoY to INR11.1b (in line). EBITDA dipped 1% YoY to INR1.7b (est. INR1.6b). Tiles volume grew 8% YoY (+2% vs. est.), while realization dropped 3.6% YoY (+1% vs. est.) in 1QFY25. OPM contracted 90bp YoY to 15% (in line). PAT fell 16% YoY to INR0.9b (in line). Management was positive on the demand outlook for the tile industry. With the recent budget announcements, it expects an increase in demand from Bihar, Andhra Pradesh, and urban housing. It projects 5-6% industry volume growth, while KJC’s volume would outperform with 11-12% growth. KJC expects the tile price to have stabilized as it largely remained flat in 1QFY25 vs. 2HFY24. It guided EBITDA margin in the range of 15-17% for FY25.

Outlook

We estimate KJC’s revenue/EBITDA/PAT CAGR at 11%/16%/18% over FY24-27. We estimate the tile volume to clock 11% CAGR over FY24-27. We expect its RoE/RoCE to improve to 20%/24% by FY27 from 17%/20% in FY24. The stock is currently trading at 38x FY26E EPS. KJC is estimated to maintain its premium valuation multiple given the healthy earning CAGR, leadership position in the industry, and strong balance sheet as well as return ratios. We reiterate our BUY rating on the stock with a TP of INR1,670 (premised on 43x Jun’26E EPS).

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