Buy Kajaria Ceramics; target of Rs 1175: ICICI Direct

ICICI Direct's research report on Kajaria Ceramics

Kajaria Ceramics’ performance was strong across topline & bottomline. Tiles sales volumes were up 39.2% YoY at 25.4 MSM, driven by a stellar rebound in demand and benign base (Q4FY20 had 19% volume decline). The topline was up 46.1% YoY at Rs 952.5 crore, driven by strong volume growth and realisations (up 2.8% YoY). Tiles revenues were up 43.1% YoY to Rs 865.8 crore. Faucet and sanitaryware revenues were up 73% YoY at Rs 71.3 crore. Plywood revenues were up 165% YoY at Rs 15.3 crore, on a low base. EBITDA was at Rs 190.9 crore with margins at 20%, up 573 bps YoY driven by operating leverage. PAT at Rs 127.1 crore was up 156.3% YoY.

Outlook

We maintain BUY and assign higher multiple at 36x P/E (vs. 29x FY23E P/E, earlier) to ascribe revised target price of Rs 1175/share (earlier Rs 950).

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