- 01 Feb 2024
- ICICI Securities
MODEST VOLUME GROWTH; LOWER GAS PRICES DRIVE MARGIN EXPANSION; GROWTH TO PICK UP IN FY25
KAJARIACER - 981 Change: 33.35 (3.52 %)News: Topline was up 5.6% YoY at ₹ 1152 crore. Tiles sales volumes were up ~6.4% YoY at 27.1 MSM. Four-year volume CAGR was at ~10%. Tiles revenues were up 2.9% YoY at ₹ 1013 crore, with pricing decline of ~2.9% YoY. EBITDA was at ₹ 179 crore, up 34% YoY, with resultant margins at 15.5%, up 333 bps YoY, on account of decline in gas prices and benefits of alternate fuel in the overall mix. PAT was at ₹ 104 crore, up 40.2% YoY, given the operating margin expansion.
Views: The margin performance was healthy, and benefits of lower gas prices is visible. The demand was muted and management indicated similar growth in Q4. Thus, FY24 volume growth is likely to be restricted to ~6-7% (vs. flattish growth for Industry) vs. earlier guidance of ~9-10% YoY volume growth in the tiles segment during FY24. For FY25, the company expects growth to pick up on real estate completion and Kajaria is likely to report 5-6% higher than industry report. On margins, it has raised its band to 15-17% vs. 14-16%, earlier.
Impact: Positive