Anand Rathi's research report on Kajaria Ceramics
In line with ARe, Kajaria Ceramics’ Q2 revenue grew 5% y/y to Rs11.8bn. EBITDA/PAT fell 12%/22% y/y to Rs1.6bn/Rs843m, below our estimated Rs1.7bn/Rs940m. Input cost pressures impacted the gross margin, which dipped 252bps y/y to 56.6%. Cost-control steps restricted the EBITDA margin’s 255bps y/y drop to 13.5%. PAT slipped 20% y/y to Rs946m. Management expects good demand for the tiles industry in H2, assuming rub-off from the strong real estate sector.
Outlook
As the stock has slipped 19% from its recent highs and 9%/15% during the last one week/month, it offers a 35% potential upside, based on our higher 12-mth TP of Rs1,695, 40x FY27e earnings (earlier Rs1,520, 40x FY26e earnings). Hence, we upgrade to a Buy.
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