Accumulate Kajaria Ceramics; target of Rs 1264: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Kajaria (KJC) has slightly downward revised its volume growth guidance between 13-14% (earlier 13-15%) and EBITDA margin between 14-16% for coming years. The domestic sector is expected to grow at ~6% in volume terms, as per management. KJC has also trimmed its Nepal expansion plan from 8MSM to 5.1MSM and guided for no price hike in FY24, however, Morbi has already taken ~4% correction in prices (as per our interaction with Morbi players). We are cautiously optimistic on the company for long term given 1) largest player positioning in domestic ceramic and vitrified tiles market (~9.3% share in overall tiles market), 2) focus on brand building (advertising spends at 3%sales), 3) expanding distribution network (1,840 active dealers in FY23), 4) reduction in fuel expenses with gas price correction & alternate fuel uses, and 5) entry in Nepal market. We expect Revenue/EBITDA/PAT CAGR of 13.8%/23.1%/29.2% over FY23-25E. Downgrade to ‘Accumulate’.

We downward revise our FY24/FY25E earnings estimate by 1.8%/2.9% and downgrade the rating to ‘Accumulate’ from Buy as we value the stock at 35x FY25 EPS to arrive at revised TP of Rs1,264 (earlier Rs 1,302).

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