Kajaria Ceramics - Q4FY20 First Cut - ICICI Securities

(CMP - Rs. 398; MCap - Rs. 6,327 crore)

Kajaria Ceramics posted weak set of numbers in Q4FY20 on the topline front with steep volumes decline on account of Covid-19. However, better than expected margins and lower taxes led to better than expected bottomline.

Q4FY20 Earnings Summary

- Kajaria's sales volumes declined by 20% YoY growth to 18.2 MSM and were below our estimate of 19.5 MSM (~13% volume decline), on account of Covid-19 impact. However, it is pertinent to note that volume decline was relatively lower than ~28% decline reported by its key peer Somany Ceramics

- The topline de-grew 20% YoY to Rs. 652 crore and was lower than our estimates of Rs. 723.4 crore on account of lower-than-expected volume

- The EBITDA margin contracted 76 bps YoY to 14.3% and was higher than our expectation of 13.2%, largely on account of lower other expenses. EBITDA at Rs. 93.4 crore, declined by 24.1% YoY (largely in line with expectations of Rs. 95 crore)

- The weakness at operating performance percolated to PAT which declined by 24.9% YoY to Rs. 49.6 crore and was slightly ahead of our estimate of Rs. 45.9 crore, given the lower taxes

- In terms of other operating parameters, working capital cycle days stands at 73 days as of Q4FY20 vs. 65 days in Q3FY20, while its net D/E stands at -0.06x, with net cash of Rs. 107 crore

While it is likely to be a washout FY21 for the tiles player with discretionary nature of demand and real estate pressure, Kajaria with net cash balance sheet and relatively resilient performance given superior brand is likely to tide over the challenging time. We would review our estimates, rating and target price and will be coming out with the detailed update soon.

Shares of KAJARIA CERAMICS LTD. was last trading in BSE at Rs.398.05 as compared to the previous close of Rs. 401.15. The total number of shares traded during the day was 43597 in over 1590 trades.

The stock hit an intraday high of Rs. 411.9 and intraday low of 395. The net turnover during the day was Rs. 17573582.

Source : Equity Bulls

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