Hold Kajaria Ceramics; target of Rs 1230: Sharekhan

Sharekhan's research report on Kajaria Ceramics

Company reported a strong miss on net earnings on account of lower OPM while consolidated revenues came in tad below estimate. Weak demand in October and higher gas prices y-o-y affected OPM. The management targets 13-15% tile volume growth for FY2024 while OPM is expected to improve from Q4FY2023. Demand remains tough in the near term. The company is undertaking modernisation of Gailpur ceramic production while its 8MSM Nepal JV unit is expected to commence operations from March 2024.

Outlook

We downgrade Kajaria Ceramics to Hold with a revised PT of Rs. 1,230 as roll-forward of valuation multiple to FY2025E gets offset by a downward revision in earnings and valuation multiple. We await a better entry point.

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