Kajaria Ceramics - Q1FY21 First Cut - ICICI Securities

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

Kajaria Ceramics reported a washout Q1 as expected, wherein lower than expected topline led to losses at EBITDA and PAT levels.

Q1FY21 Earnings Summary

- Kajaria's sales volumes declined by 61% YoY growth to 7.7 MSM and were below our estimate of 9.7 MSM (~51% volume decline), on account of extended impact of lockdown due to Covid-19

- The topline de-grew 60% YoY to Rs. 277.6 crore and was lower than our estimates of Rs. 353.1 crore on account of lower-than-expected volume

- The company reported EBITDA loss of Rs. 7.6 crore (our expectations - EBITDA of Rs. 33.7 crore) on account of negative operating leverage

- The weakness at operating performance percolated to PAT wherein it reported a loss of Rs. 27.1 crore (vs. our expectations of Rs. 7 crore PAT)

- Collection during the quarter was strong and consequently, net cash improved to Rs. 182 crore (vs. Rs. 107 crore in Q4). The capacity utilisation has improved to 78% in the month of July 2020 (vs. 26% in June), which is likely to result in better than expected improvement in Q2

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.408.35 as compared to the previous close of Rs. 413.95. The total number of shares traded during the day was 30886 in over 1311 trades.

The stock hit an intraday high of Rs. 415 and intraday low of 404.75. The net turnover during the day was Rs. 12683871.

Source : Equity Bulls

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