Kajaria Ceramics - Q4FY20 Result Update - ICICI Securities

Kajaria Ceramics posted a weak set of Q4FY20 numbers on the topline front with steep volume decline due to Covid-19. Sales volumes fell 20% YoY to 18.2 MSM on account of Covid-19 impact, specifically in the second of March. However, it is pertinent to note that the 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. 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 fell 24.1% YoY. Weakness at the operating level percolated to PAT, which fell 24.9% YoY to Rs. 49.6 crore.

Valuation & Outlook

While it is likely to be a washout FY21 for the tiles industry, as a whole, with discretionary nature of demand and real estate pressure, Kajaria with a net cash balance sheet and relatively resilient performance, given superior brand, is likely to tide over the challenging times. However, we would turn constructive once a volume recovery is seen (likely only by FY22). Hence, we maintain our HOLD recommendation on the stock with a revised target price of Rs. 395/share, at 27x FY22E P/E.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_KajariaCeramics_Q4FY20.pdf

Shares of KAJARIA CERAMICS LTD. was last trading in BSE at Rs.391.4 as compared to the previous close of Rs. 392.15. The total number of shares traded during the day was 12133 in over 538 trades.

The stock hit an intraday high of Rs. 402 and intraday low of 388.5. The net turnover during the day was Rs. 4798536.

Source : Equity Bulls

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