Buy Kajaria Ceramics; target of Rs 1580: Motilal Oswal

Motilal Oswal is bullish on Kajaria Ceramics recommended buy rating on the stock with a target price of Rs 1580 in its research report dated October 22, 2023.

Broker Research

October 25, 2023 / 14:02 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on Kajaria Ceramics

Kajaria Ceramics (KJC) reported consolidated revenue/EBITDA growth of 4%/ 39% YoY to INR11.2b/INR1.8b (in line) in 2QFY24. OPM stood at 16% (vs. est. 16.2%). PAT came in at INR1.1b (vs. est. INR1.2b). The management has cut its FY24 volume growth guidance to 9-10% from 13- 15% earlier due to weak demand in 1HFY24. However, it believes demand should pick up in 2HFY24, aided by good traction in the real estate sector. It has maintained margin guidance at 14%-16%. India’s tile exports grew 25% YoY during Apr-Aug’23, and India is expected to become the largest exporter of tiles by FY25. In our recent report, we highlighted that fuel prices for KJC could increase in 2HFY24 vs. 2QFY24 due to a rise in Brent crude/ LNG spot prices and we had reduced our volume growth estimate for FY24 to 9% from 11% earlier.

Outlook

We believe that a 26% earnings CAGR over FY23-26E, strong return ratios (RoE of 23%, ROCE of 27% and RoIC of 32% in FY26E), and a healthy balance sheet will help KJC maintain its premium multiples. We reiterate our BUY rating with a TP of INR1,580, based on 42x Jun’25E EPS.

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