Buy Kajaria Ceramics; target of Rs 1325: Prabhudas Lilladher

Moneycontrol • 6 days ago

Original source

Key Investment Pillars

  • Kajaria Ceramics (KJC IN) reported 10.2% YoY volume growth in Q2FY27, outperforming the domestic tile industry's estimated 5-6% growth, driven by improving demand, deeper distribution penetration, and market share gains.
  • The company has guided for double-digit volume growth in H2FY27, with EBITDA margins remaining stable at 18-19%, supported by capacity expansions at Srikalahasti and Gailpur, and cost savings from lower fuel consumption and cheaper gas sourcing.
  • KJC is strengthening its distribution network through deeper penetration in Tier 2/3 cities, expansion of exclusive showrooms, and greater engagement with architects, while improving project sales amid rising construction activity.
  • The adhesives segment is expected to reach INR 2.4bn in FY27 and INR 4bn in FY28, driven by capacity expansion, wider market penetration, and rising demand for larger-format tiles.

Thesis Validation Checklist

  • Investors should watch for double-digit volume growth in H2FY27, with EBITDA margins remaining stable at 18-19%.
  • Capacity expansions at Srikalahasti and Gailpur, and cost savings from lower fuel consumption and cheaper gas sourcing, will be key drivers of growth.
  • The company's ability to strengthen its distribution network, expand its adhesives and bathware businesses, and improve project sales, will be important signals to validate the thesis.