Buy Kajaria Ceramics; target of Rs 620: ICICI Direct

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26 Aug, 2025 12:21

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The topline grew 14.7% YoY to Rs 758.6 crore, mainly on account of strong volume growth and in line with our estimate of Rs 755.1 crore EBITDA margins expanded 91 bps QoQ to 15.9% (slightly better than our expectation of 15.5%) on account of lower power & fuel costs Reported PAT grew 24.1% YoY to Rs 65.9 crore (our estimate: Rs 61.4 crore) mainly on account of EBITDA margin expansion & lower tax rate The working capital cycle increased from 59 days in Q2FY19 to 62 days in Q3FY19 while it turned a net cash company (net cash: Rs 63 crore).

With the recent clampdown related to tax evasions by unorganised Morbi-based tile manufacturers and financial distress observed among some of these players, Kajaria, being a leading organised player, could be a prime beneficiary of the unorganised to organised shift in the ceramic industry. We introduce our FY21E estimates and expect revenues, PAT to grow at 14.9%, 18.6% CAGR to Rs 4115.6 crore, Rs 392.9 crore, respectively, in FY18-21E. Hence, we maintain our BUY recommendation on the stock with a target price of Rs 620/share (~25x FY21E EPS).

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