Kajaria Ceramics had a bumper start to the year. Now it needs demand to catch up
Subscribe to enjoy similar stories. Shares of Kajaria Ceramics Ltd have lagged the Nifty 500 index so far in 2024. While the Kajaria stock has gained about 16%, the index has risen by 25%.
Kajaria’s stock market underperformance can be attributed largely to weak demand in the tiles sector. Still, Kajaria’s returns are not insignificant. A saving grace is that the company began 2024-25 clocking an 8% year-on-year growth in sales of tiles by volume in the June quarter (the first quarter of FY25), far ahead of the industry’s 3-4% growth.
Kajaria is looking at a low double-digit growth in volumes in FY25 aided by extensive branding and distribution efforts. In the second quarter, however, the monsoons are likely to spoil the party as it is a seasonally weak period when construction activities typically slow down. Thus, momentum is likely to gather pace only in the second half of FY25.
In general, the company foresees the tiles industry to fare much better in FY25 than it did in FY24, with exports momentum likely to sustain and a rub-off of strong real estate demand likely leading to better tiles off-take. After posting about 4% year-on-year consolidated revenue growth in FY24 to ₹4,578 crore, Kajaria’s management expects a three-year compound annual growth rate of 12% over FY24-FY27. Nonetheless, the management said during the company’s first-quarter earnings call that revenue growth in FY25 would be slightly lower than volume growth and that prices had more or less stabilized.
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