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Kajaria Ceramics is one among the Key beneficiaries of the GST bill. The company recently declared its quarterly performance result on 3rd of August and has presented good numbers in it. The consolidated total income from operations of the company stands at Rs. 667.20 crores this quarter as compared to Rs. 548.72 crores in the corresponding quarter last financial year. The net profit also went up to Rs. 63.41 crores as against Rs. 46.22 crores of Q1FY16. The stock has given 33.32% returns in six months and 67.84% returns over a year time. The scrip has been trading near its lifetime high value for quite some time now. Product Range Ceramic Wall & Floor Tiles Polished Vitrified Tiles Glazed Vitrified Tiles Sanitary ware & Faucets Tile Adhesives & Grout Q1fy17 Results Update (Standalone) Total income from operations for the quarter ended 30th June 2016 grew by 7%, stood at Rs. 639.83 crore against Rs. 599.94 crore in Q1FY15. Operating Profit for the quarter ended 30th June 2016 grew by 48% standing at Rs. 95.03 crore against Rs. 64.11 crore in Q1FY15. PAT for the quarter ended 30th June 2016 grew by 40% standing at Rs. 65.44 crore against Rs.46.70 crore in Q1FY15. EPS stood at Rs. 8.23 Investment Rationale Only Ceramic company in India to be conferred with Super brand for 9th consecutive time Indian tile industry is estimated to be 756 million sq. mtr, offering steady growth for Kajaria Industry size is estimated to be Rs. 24000 crore as of March 2015. National Brands contribute to around 50% of industry with Kajaria being the No. 1 The industry has been growing at a CAGR of 12 – 13% per annum in the last 4-5 years Focused on increasing shelf space by growing dealer network in Tier 2 and Tier 3 cities Kajaria has recently Commissioned 3rd plant in January 2016 at Malutana (Rajasthan) with a capacity of 6.50 million sq. mtr of polished vitrified tiles. Opening exclusive showrooms for all product segments like Kajaria Galaxy, Kajaria World, Kajaria Star, Kajaria Prima and Kajaria Studio etc. in metros and mini metros New Acquisition – The Company has acquired 51% stake in Floera Ceramics Pvt. Ltd. With a capacity of 5.70 msm p.a in Andhra Pradesh and is expected to be commissioned by September 2017 Adjudged the ‘Best managed company’ in the small cap category by Asiamoney Large Distribution Network of strong and loyal 1100 dealers catering to 4000 associate dealers The Government has launched the ‘Smart City Mission’ covering 100 cities in five years (FY16 to FY20) to accelerate urbanization, improve the quality of life and attract investment. This will require a comprehensive development of physical, institutional, social and economic infrastructure. The company is taking part in exhibitions across the county for its brand promotion Working closer with dealers, subdealers, masons and architects towards skill development, thereby graduating them into Kajaria’s brand ambassadors. The Central Government has launched a comprehensive mission ‘Housing for All by 2022’ – a scheme which will cover all 4041 statutory towns as per Census 2011 with a focus on 500 Class I cities. An estimated six crore houses will be required in India to achieve this goal by 2022. The ‘Swachh Bharat Abhiyaan’ targets to build six crore toilets across the country by 2019, which will benefit Kajaria’s sales. At CMP of Rs.1238 Kajaria Ceramics share price is trading at a P/E of 43.54, the market cap of the company is 9974.15 crore. Kajaria Ceramics share price has touched a 52 week high of Rs. 1280.00 on 03-Aug-16 and a 52 week low of 607.15 on 25-Aug-15. Investment Opinion Kajaria Ceramics given the sturdy growth in the industry, favorable structural shift, its better margin and return ratio profile coupled with a strong balance sheet is a recommended buy at 1185 (Month 1 level as per Dynamiclevels) for a target of 1280.
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