HDFC Securities' research report on Kajaria Ceramics
Kajaria’s Q2FY24 tiles volume/consolidated revenue growth remained muted at 6/4% YoY on subdued demand. EBITDAM expanded 400bps YoY to 16% on a sharp 68% cool-off in gas prices (despite partial cost benefits passing through). Tiles/non-tiles revenue rose 3/18% YoY. Consolidated EBITDA/APAT rose 39/47% YoY. KJC expanded its tiles capacity by 4.9MSM in Q2FY24 and will be further adding 5.1MSM in Nepal next year. The company expects demand to accelerate H2FY24E. We estimate KJC to deliver 12/22/26% consolidated revenue/EBITDA/APAT CAGR during FY23-26E and its RoE/RoCE should remain robust at 20%+.
Outlook
We upgraded Kajaria Ceramics (KJC) to BUY with a revised target price of INR 1,470/share (35x Sep-25 EPS).
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