Kajaria Ceramics delivered impressive first-quarter results with net profit surging 56% year-on-year, significantly outpacing analyst estimates. According to reports from Business Standard, the company's revenues rose 20% despite subdued tile volume growth of 6%, with the growth largely driven by better realisations of 11% in tiles and 16% in bathware. Operating profit margins expanded 266 basis points Y-o-Y to 19.6%, compared with 19.2% in Q4FY26, due to steady employee costs and other expenses. The company's operating profit surged 39% during the quarter, demonstrating strong operational efficiency despite supply chain challenges.
The management is targeting over 20% growth in tile revenue, driven equally by volume and value growth, with healthy recovery signs expected in the second half of FY27. As reported by Business Standard, the company has announced two brownfield expansions at Srikalahasti (Andhra Pradesh) and Gailpur (Rajasthan), which should boost overall capacity. The management highlighted its increased focus on the project segment and has received orders from two large projects in the quarter. Operating profit margins are expected to sustain in the 18-19% range going forward, with the company expecting healthy recovery signs in the second half of FY27.
Kajaria Ceramics shares surged 5.3% to ₹1,256 following the strong Q1 performance, with the stock trading at ₹1,256 against the previous close of ₹1,192.8. The stock opened at ₹1,210 and reached a high of ₹1,261.7, demonstrating strong intraday momentum. According to Univest data, the company has a market capitalisation of ₹18,692.17 crore and trades at a P/E ratio of 34.34x, which is above the benchmark median of 28.35x, indicating premium valuation. The company's ROE stands at 17.03% and ROCE at 23.07%, both exceeding peer medians of 9.86% and 14.43% respectively.
While higher gas costs and supply constraints from the Iran war impacted the entire sector, the effect has been higher on smaller, unorganised players. According to Business Standard, this has helped branded and organised players bridge the price gap with the unorganised sector and gain market share. Motilal Oswal Research has raised earnings estimates by 18% for FY27 and 10% for FY28 following the strong Q1 performance. The stock is currently trading at 29 times its FY28 earnings estimates and maintains a premium to smaller listed peers. While there were earlier supply issues, the availability of propane gas in Morbi has improved materially, with most factories now operational, easing supply constraints.
