Motilal Oswal Recommends Buying Kajaria Ceramics, Targets ₹1362
Kajaria Ceramics Reports Strong Quarter Amidst Industry Challenges
Kajaria Ceramics (KJC) has reported a healthy quarter, driven by an 11-12% year-over-year (YoY) rise in tile volume and revenue. The company's business unification efforts and reduced competition due to severe gas availability issues in Morbi have contributed to this growth. As a result, revenue and profit after tax (PAT) have grown by 12% and 266% YoY, respectively, outperforming our estimates by 4-7%.
The company's bathware and adhesives segments have also shown significant growth, with revenue increasing by 5% and 92% YoY, respectively. However, the gross margin has contracted by 165 basis points (bps) YoY, while the EBITDA margin has expanded by 786 bps YoY to 19.2%. This expansion in EBITDA margin is attributed to cost optimization efforts and operational leverage (OpLev) benefits.
Stock Performance and Outlook
The stock has risen approximately 30% from its lows in March 2026. With expectations of a recovery in sales volume, high margins, and strong cash flows, Motilal Oswal reiterates its BUY rating on KJC with a target price of INR1,362. This target price is based on 30x FY28E earnings per share (EPS).
| Metric | Q4 FY26 | Q4 FY25 | YoY Growth |
|---|---|---|---|
| Revenue | 12% | - | 12% |
| PAT | 266% | - | 266% |
| Bathware Revenue | 5% | - | 5% |
| Adhesives Revenue | 92% | - | 92% |
| Gross Margin | -165bps | - | -165bps |
| EBITDA Margin | 19.2% | - | 786bps |
Investor Takeaway
Investors should consider buying Kajaria Ceramics with a target price of ₹1362.
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