Hold Kajaria Ceramics; target of Rs 1,433: ICICI Securities

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26 Aug, 2025 12:21

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KJC reported Q1FY25 consolidated revenue growth of 4.6% YoY (5-year CAGR of 9.7%) to INR 11.1bn driven by tiles volume growth of 7.9% YoY (5-year CAGR of 6.5%), while realisation declined 4.1% YoY/0.7% QoQ. Bathware segment witnessed revenue growth of 8.7% YoY, while plywood revenue grew 25.1% YoY (on low base). Management stated tile demand has started improving from Jun’24 post tepid Apr-May’24 and expects double-digit volume growth Q2FY25 onwards. KJC expects demand trend to remain healthy going ahead and has maintained its guidance for low double-digit volume growth in FY25. Working capital days in Q1FY25 stood at 59 (-3 days YoY) and it has cash surplus of INR 3.9bn. It plans to add 10% dealers every year (1,800 as of FY24) to aid growth in tile segment. We have modelled 10.9% tile volume CAGR over FY24-27E driven by increasing geographical reach, growing dealer network and healthy housing market.

Kajaria Ceramics (KJC) has reported Q1FY25 consol. revenue growth of 4.6% YoY driven by tile volume growth of 7.9% YoY (-8.8% QoQ; 5-year CAGR of 6.5%). EBITDA margin fell 90bps YoY (+114bps QoQ) to 15% due to higher employee expense (+183bps YoY) while RM cost (including power and fuel cost) declined 103bps YoY (-214bps QoQ), resulting in EBITDA/APAT decline of 1.3%/16.5% YoY, respectively. As per management, demand was subdued in Q1FY25 due to general elections and extreme summers but believes it will pick up led by buoyant real-estate market. It has maintained its guidance for low double-digit volume growth and OPM of 15-17% in FY25. We broadly maintain estimates but downgrade the stock to HOLD from Buy due to limited upside potential post 20% stock price rally in the past 3-months with a rolled-over Jun’25E TP of INR 1,433, set at an unchanged 38x P/E.

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