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🏭 Kajaria Ceramics Q1 FY26 Results: Margins Improve Amidst Soft Demand 📊

Lesson 165/173 | Study Time: 10 Min

Course: Quarterly Result Updates & Analysis

🏭 Kajaria Ceramics Q1 FY26 Results: Margins Improve Amidst Soft Demand 📊

CMP: ₹1240 | Market Cap Leader in Indian Tiles

🔹 1. Recent Insights & Management Highlights

Market Demand: Q1 FY26 saw continued soft demand in the tiles industry, with volume growth nearly flat. The company reported a consolidated revenue of ₹1,104 crore (down 1% YoY).
Profitability Boost: Margins improved to 16.72% (vs 15% YoY), driven by cost reduction, human resource optimization, and efficiency measures.
Operational Focus: Management remains committed to enhancing cost efficiencies and optimizing capacity utilization, expecting these steps to drive future profitability.

🔹 2. Consolidated Financial Analysis

Income Statement (₹ Crores)

Particulars	Q1 FY26	Q4 FY25	Q1 FY25	YoY Growth
Revenue	1,104	1,222	1,114	-1%
Net Profit	109	43	90	+21%
EBITDA	185	159	167	+11%
EBITDA Margin	16.7%	13.0%	15.0%	+170 bps

Segmental Revenue:

Tiles: ₹1,011 Cr (up slightly YoY)
Bathware & Others: ₹91 Cr (flat YoY)

Regional Mix: Largest presence in North & West India, with capacity expansions in Gujarat, Rajasthan, UP, AP, and Telangana.

🔹 3. Profitability, Growth & Valuation Ratios

Ratio	Q1 FY26	Q4 FY25	Q1 FY25
ROE	15.57%	10.98%	17.08%
ROCE	20.3%	16.28%	21.9%
EPS (Consolidated)	₹6.84	₹2.67	₹5.64
P/E (TTM at CMP 1240)	~63x	-	-

Net Debt: Company remains net cash positive with a negative net debt/equity of -0.18.

🔹 4. Industry-Specific KPIs (Building Materials / Tiles)

Tile Volume (MSM): 27.18 MSM (Q1 FY26 vs 26.98 MSM Q1 FY25)
Capacity Utilization: Subsidiaries operated at 66–83% (Morbi, Gujarat; Telangana; Rajasthan)
Bathware & Faucets: 80%+ capacity utilization in most plants
Discontinued Plywood Division: Minimal impact on core business

🔹 5. Near-Term & Long-Term Outlook

Near-Term (Next 1–2 Quarters):

Muted demand is expected to persist in the tiles sector, but margin gains should sustain on cost optimization.
Improved utilization in subsidiaries and international JVs may support volume in H2 FY26.
Management expects efficiency gains to continue.

Long-Term:

India's housing and infra push to drive secular tile demand.
Kajaria’s leadership in scale, branding, and distribution gives a strong edge.
Focus on higher-value products, exports, and cost leadership may enable sustained outperformance once demand normalizes.
Risks: Prolonged demand softness, competition, raw material or energy cost spikes.

🔹 6. FY26 Estimates & Trend Analysis

Historical Trend:

	Q1_FY25	H1_FY25	9M_FY25	FY25
Sales Growth	5%	5%	4%	4%
Profit Growth	-16%	-19%	-22%	-31%
Margin	8.3%	7.8%	7.4%	6.5%

Estimate for FY26:

Sales Growth: 3–5% (modest, in line with Q1)
Profit Margin: 7–8% (improved over FY25 due to higher Q1 margin)
Profit Growth: 20-25% Profit Growth expected which is positive (vs strong declines in FY25), assuming margin discipline holds and demand improves in H2.

🔹 7. Key Positives & Investment Stance 🚀

Key Positives:

Market leader with pan-India scale
Strong improvement in EBITDA margin
Net cash, healthy return ratios, and high promoter holding

Risks:

Weak demand environment, especially in lower-tier cities
Energy/raw material cost fluctuations
Prolonged price competition

Investment View:

Cautiously optimistic for long-term investors — Margin discipline and market leadership are strong positives, but sustained volume growth is needed for rerating. HOLD / ACCUMULATE on declines for long-term.

🔹 8. Disclosure

This analysis is provided solely for informational purposes and does not constitute investment advice. Investors should perform their own due diligence before making investment decisions.

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Piyush Patel

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