ICICI Securities Downgrades Kajaria Ceramics to Target Price of Rs 1072
Kajaria Ceramics Reports 12.4% YoY Consolidated Revenue Growth in Q4FY26
Kajaria Ceramics (KJC) has reported a 12.4% year-over-year (YoY) consolidated revenue growth in the fourth quarter of fiscal year 2026, driven by a 11.3% YoY increase in tiles volume. This growth was achieved despite a low base, with a quarterly on-quarter (QoQ) increase of 15.7% and a 7-year compound annual growth rate (CAGR) of 5.8%.
The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) margin, also known as operating profit margin (OPM), expanded by 786 basis points (bps) YoY on a low base, to 19.2%. This improvement was primarily due to a 116bps YoY increase in gross margin and a reduction in employee and other expenses by 240bps and 430bps, respectively. As a result, KJC's EBITDA grew by 90.4% YoY.
According to management, demand improved in the fourth quarter, partly due to the Morbi issue. In addition, KJC had implemented a price hike in March and April of 2026, which should help sustain margins despite raw material (RM) pressure. However, the company refrained from providing guidance on tiles volume growth due to the uncertain environment. Instead, management guided that the operating profit margin (OPM) is expected to be around 18-19% for fiscal year 2027.
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
EBITDA Growth Comparison
| Year | EBITDA Growth |
|---|---|
| FY26 | 90.4% |
| FY25 | N/A |
Price Movement
KJC's stock has experienced a ~32% price rally in the last three months, prompting a revision in our earnings estimates and target price.
Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline
Recommendations Update
We have revised our earnings estimates for KJC and are now projecting an 8.3% and 6.2% increase in EBITDA for fiscal years 2027 and 2028, respectively. However, we have downgraded our recommendation to "REDUCE" due to the recent price rally. Our revised target price for March 2027 is INR 1,072.
Investor Takeaway
Investors should be cautious and consider reducing their holdings in Kajaria Ceramics due to the downgrade.
More in Market
Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline
Indian Stocks to Watch: BHEL, Agarwal Industrial, JBM Auto, Rajesh Exports, Indian Energy Exchange, Lenskart Solutions in Market Focus on June 4.
