Feb'25 View on Kajaria Ceramics Ltd

Kajaria Ceramics Ltd is primarily engaged in manufacturing and trading of ceramic and vitrified tiles in India. It is the largest manufacturer of ceramic/ vitrified tiles in India and 8th largest in the world. Kajaria reported a weak quarter with EBITDA and net profit witnessing yoy and qoq decline in Q3FY25. Overall results came in below our expectations. Tile revenue growth was impacted on account of a decline in average selling price (ASP). Tiles segment volume growth of 6.7% yoy was relatively better in an otherwise challenging demand environment. Non-tile revenue declined during the quarter and impacted overall performance. EBITDA margin declined further during the quarter. The management maintained its 3- year roadmap that they had shared earlier this financial year. We cut our estimates in view of weak Q3FY25 results and pressure on EBITDA margin (vs FY24). Recovery in demand is expected to support margin expansion over the medium term. We retain BUY with a revised fair value of Rs1,406.