Accumulate Kajaria Ceramics; target of Rs 1368: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Kajaria Ceramics with a target price of Rs 1368 in its research report dated October 22, 2023.

Edited by : Subhash Helgaokar

October 23, 2023 / 16:17 IST

accumulate

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Kajaria Ceramics

Kajaria Ceramics (KJC) downward revised its volume growth guidance between 9-10% (earlier 13-15%) and maintained higher EBITDA margin (around 16.0%) with lower power and fuel costs for FY24, while expecting sequential improvement in volume growth in coming quarters. Management indicated gradual pick-up in volumes post Sep-23 and expected improvement in demand environment emanating from rub-off of strong growth in real estate sector to drive better volume growth in H2FY24. The company reported improvement in EBITDA margin (+400bps YoY) with reduction in fuel expenses through decrease in gas prices and use of alternate fuel. KJC reiterated that off gas price reduction benefits will be used for a) promotions/discounts to drive volume, b) passing it on to JV partners, and c) margin improvement. We are cautiously optimistic on the company for long term given 1) its largest player positioning in domestic tiles market, 2) focus on brand building (adv. spends at 3% sales), 3) expanding distribution network (1,840 active dealers in FY23 & expected to touch 2000 in FY24), 4) reduction in fuel expenses with gas price correction & alternate fuel uses, and 5) exponential growth in Bathware/Plywood/Adhesive businesses.

Outlook

We expect Revenue/EBITDA/PAT CAGR of 12.0%/20.0%/24.3% over FY23-26E and downward revise our FY24/FY25E/FY26E earnings estimate by 5.8%/5.3%/5.3%. Maintain ‘Accumulate’ rating, as we value the stock at 35x FY25 EPS to arrive at revised TP of Rs1,368 (earlier Rs 1,445).

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