Kajaria Ceramics reports muted volumes growth; margins declineKAJARIACER - 1366 Change: 28.25 (2.11 %)
The topline was up 10.7% YoY at Rs 1077.8 crore. Tiles sales volumes were muted (up ~0.5% YoY at 24.9 MSM (lower than estimate of ~4% volume growth). Three-year volume CAGR stood at 8%. Tiles Revenues were up 11.5% YoY at Rs 984 crore, with pricing growth contributing almost all the growth, largely undertaken owing to sharp rise in power costs. The company reported EBITDA of Rs 129.4 crore (our expectations: EBITDA of Rs 168 crore). The resultant margins at 12%, was down 323 bps QoQ, and lower than estimates of 15%, owing to lower volume growth and higher other expenses.
The decline in margins have been steeper than expected. The company has guided for atleast 200 bps improvement in margins ahead . Nonetheless, Kajaria with net cash balance sheet and relatively resilient performance given superior brand and leadership is likely to remain a relatively resilient than other players.