Please refer to important disclosures at the end of this report
Kajaria Ceramics Limited (KCL) is the largest manufacturer of ceramic and
vitrified tiles in India. Being the market leader, it has significantly increased its
capacity from 30.6 MSM in FY11 to 68.6 MSM in FY17. This was driven mainly
through the acquisition of a stake in Cosa, Soriso, Vennar, Jaxx and
expansion/conversion of existing facilities. The company has spent `74crore on
advertisement & promotion and plans to spend `100crore for FY18. With the
demand environment improving, the management has guided for double digit
volume growth over the next three years. Prior to demonetisation, only 2% of
transactions happened via credit card and cheques, which has now increased to
~50% at the dealer level. The company plans to spend ~`400crore on capex
over the next few years, which includes `50crore on the Gailpur plant expansion
and `130crore for Floera plant. The revenue contribution from Sanitaryware &
faucetware segment was at 4.3% in FY17and it is expected that the revenue from
this division will be at 5-6% of the overall topline in FY18. It is expect that after
implementation of GST, it would act as a key catalyst for KCL and reduce pricing
differential between organised & unorganised tiles. Further, with demand in real
estate sector set to pick up with government’s focus on affordable housing, KCL
would be well placed to capture this opportunity. The company has reported
consistent improvement in cash flow from operations from `90.8cr in FY12 to
`271.3cr in FY16. The company has reported consistent profit growth of 30.9%
CAGR over 5 years and has a healthy return on equity (ROE) of 28.6% for the
last 3 years. The company has been maintaining a healthy dividend payout of
18.84%. Hence Buy.
CMP `702
Reuters Code
BSE Sensex
Face Value (`)
Market Cap (` cr)
52 Week High / Low
Avg. Daily Volume
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Kajaria Ceramics
Others | Miscellaneous
June 5, 2017
Kajaria Ceramics | Miscellaneous
June 5, 2017
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Disclosure of Interest Statement Kajaria Ceramics
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)