Kajaria Ceramics - Q4FY21 First Cut - ICICI Direct

(CMP - Rs. 1017; MCap - Rs. 16.183 crore)

Kajaria Ceramics reported a robust set of numbers as it reported a superior volume growth which percolated to operating leverage led beat at EBITDA and PAT level.

Q4FY21 Earnings Summary

- Kajaria's sales volumes were up 39.2% YoY at 25.4 MSM and much better than our estimate of ~24% volume growth), driven by stellar rebound in demand and benign base (Q4FY20 had 19% volume decline)

- The topline was up 46.1% YoY at Rs. 952.5 crore and was higher than our estimates of Rs. 841.8 crore on account of higher-than-expected volume and realisations (up 2.8% YoY). Tiles Revenues were up 43.1% YoY at Rs. 865.8 crore. Faucet and Sanitaryware revenues were up 73% YoY at Rs. 71.3 crore. Plywood revenues were up 165% YoY at Rs. 15.3 crore, on a low base

- The company reported EBITDA of Rs. 190.9 crore (our expectations: EBITDA of Rs. 168.4 crore). The resultant margins at 20% were up 573 bps YoY driven by operating leverage benefits

- The beat at operating performance percolated to PAT wherein it reported a Rs. 127.1 crore (vs. our expectations of Rs. 107.1 crore) up 156.3% YoY

- Working capital was at 50 days vs. (55 days in Q3) and much lower than 73 days in Q4FY20, coupled with healthy operating cash flow generation. Consequently, net cash improved to Rs. 349 crore in Q4FY21 (vs. Rs. 107 crore in FY20)

While Q1FY22 will be impacted by second wave, we highlight that the growth momentum in sales volume has been much better than anticipated (driven by tier II/III cities initially) and strong recovery again is likely. Kajaria with net cash balance sheet and relatively resilient performance given superior brand and leadership is likely to remain a key beneficiary of demand recovery, going ahead. We would review our estimates, rating and target price and will be coming out with the detailed update soon after the conference call.

Shares of KAJARIA CERAMICS LTD. was last trading in BSE at Rs.1016.35 as compared to the previous close of Rs. 1021.7. The total number of shares traded during the day was 33647 in over 2867 trades.

The stock hit an intraday high of Rs. 1054.15 and intraday low of 1009.95. The net turnover during the day was Rs. 34754147.

Source : Equity Bulls

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