PL First Cut – Kajaria Ceramics - Q1FY24

PL First Cut – Kajaria Ceramics - Q1FY24 – *Praveen Sahay – Research Analyst, Prabhudas Lilladher Pvt Ltd*

Kajaria Ceramics - Q1FY24 Result First Cut - Missed volume growth, improvement in margin

(CMP: Rs1428 | MCap: Rs227bn | HOLD)

➡️ Revenues grew by 5.6% YoY to Rs10.6bn (PLe: Rs11.2bn, 5.3% below) vs 3.8% below con. est.: Rs11.1bn. Tiles segment revenues grew by 5.4% YoY (contributes 91%sales) and other segment revenues grew by 6.9% YoY.

➡️Gross margins contracted by 720bps YoY to 55.7%. (cons. est.: 47.9%)

➡️ EBITDA grew by 10.2% YoY to Rs1.7bn (PLe: Rs1.8bn, 6.4% below) vs 2.2% below con. Est.: Rs1.7bn. EBITDA Margins were flat with increase of 67bps YoY to 15.9%, (PLe: 16.1% & cons. Est.: 15.6%)

➡️ Fuel expenses %sales reported 18.2% in Q1FY24 from 26.6% in Q1FY23

➡️PBT grew by 13.5% YoY to Rs1.4bn (PLe: Rs1.5bn, 4.5% below) vs in-line with cons. est.: Rs1.4bn

➡️ PAT grew by 16% YoY to Rs1.07bn (PLe: Rs1.1bn, 3.6% below) vs 3.2% above con. Est.: Rs1.04bn

➡️ Tiles Volume grew by 7.2% YoY (PLe: 12.5% YoY)

➡️Own manufacturing tiles (contributes 51% of sales) revenue were flat with a growth of 0.2% YoY to Rs5.4bn. Sales volume grew by 3% to 13.8MSM.

➡️Subsidiaries Tiles (contribute 13% of sales) revenue grew by 1.5% YoY to Rs1.3bn and sales volume by 13% to 4.8MSM

➡️Outsourcing Tiles (contribute 27% of sales) revenue grew by 18.7% YoY to Rs2.8bn and sales volume by 13% to 6.4MSM.

➡️Sanitary-ware/Faucet (contribute 8% of sales) grew by 17.3% YoY to Rs837mn

➡️Plywood de-grew by 29.6% YoY to Rs143mn

➡️Adhesives grew by 25.4% YoY to Rs96mn

➡️Working capital at 62days vs 59days in Mar-23.

The stock is currently trading at 47x/40x FY24/FY25 earnings.