Earnings Report: Kajaria Ceramic disappoints the market, stock closes with a loss of 4.01%

During Q2FY23, Net Profit was down by 58% and margins were under pressure.  

In Q2FY23, revenue grew by 10.7% YoY to Rs 1077.76 crore from Rs 973.55 crore in Q1FY22. On a sequential basis, the top line was relatively flat. PBIDT (Ex OI) was reported at Rs 137.04 crore, up by 27% as compared to the year-ago period and the corresponding margin was reported at 12.71%, contracting by 656 basis points YoY. During H1FY23, PBIDT (Ex OI) however grew by 6% on a YoY basis.  

PAT was reported at Rs 68.89 crore, down by 57.74% from Rs 119.32 crore in the same quarter for the previous fiscal year. The PAT margin stood at 6.4% in Q1FY23 shrinking from 12.26% in Q1FY22. During H1FY23, PAT however grew marginally by 2% on a YoY basis. 

Kajaria Ceramics is the largest manufacturer of ceramic/vitrified tiles in India and the 8th largest in the world. It has a present annual capacity of 84.45 million square meters (MSM) presently, distributed across eight plants - one at Sikandrabad in Uttar Pradesh, one at Gailpur, one at Malootana in Rajasthan, two at Morbi in Gujarat, one at Vijayawada, one at Srikalahasti in Andhra Pradesh and one at Balanagar in Telangana. 

Commenting on the quarterly performance, Ashok Kajaria, Chairman of the company stated, “Second quarter was one of the toughest quarters in terms of the subdued demand scenario and disruptions in natural gas supply followed by an unprecedented increase in gas cost. Nonetheless, recent corrections in price should have a positive impact on margins going forward.” 

Further, the management expects the tile industry should witness gradual demand pickup post-festive seasons due to continued traction in the real estate sector and the government’s focus on infrastructure spending despite high input costs and increasing interest rates. 

Shares of Kajaria Ceramic have underperformed, falling 20.55% YTD. The latest quarterly performance disappointed the market and as such the stock fell sharply post the announcement of the quarterly results. 

At the closing bell, Kajaria Ceramic was trading at Rs 1045, down by 4.01% from its previous close of Rs 1088.70, The stock logged its intraday high and low of Rs 1095 and Rs 1044.20.