Anand Rathi's research report on Kajaria Ceramics
Kajaria Ceramics’ Q3 revenue rose only 1% y/y to Rs 11.6bn. EBITDA/ PAT fell 16.8%/25.4% y/y to Rs1.5bn/Rs777m, below ARe’s Rs1.9bn/ Rs 1.2bn. Lower revenue and higher input costs led to a 43bp y/y gross margin contraction to 58.5%. High employee/ other operating costs led to a 274bp y/y contraction in the EBITDA margin to 12.8%. The PAT margin dipped 237bps y/y to 6.7%. Management expects 15-17% revenue growth and a 14-15% EBITDA margin in FY26 driven by higher retail sales in the mix, stabilisation of the new sanitaryware plant and greater cost efficiencies.
Outlook
We expect 10.7/13.8% revenue/earnings CAGRs over FY24-27. We retain our Buy rating on the stock with a 12-mth TP of Rs1,563, 40x FY27e earnings (earlier Rs1,695, 40x FY27e earnings).
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