Prabhudas Lilladher has issued a buy rating on Kajaria Ceramics with a target price of ₹1,147, as reported by Moneycontrol. The brokerage's research report dated March 30, 2026, maintains its positive outlook on the ceramic tiles manufacturer. The target price represents an upward revision from the earlier target of ₹1,056, indicating increased confidence in the company's prospects. However, analysts note that the stock trades at a P/E of 37-41x, which reflects market leadership but also seems to price in substantial future growth and stable margins.
According to Prabhudas Lilladher's interaction with Kajaria Ceramics management, the company demonstrated 7-8% volume growth in Q4FY26, as reported by Moneycontrol. This recovery was supported by channel destocking and normalization of operations. The management highlighted that supply disruptions in Morbi, including gas issues and shutdowns, have created market share gain opportunities for the company. However, optimism about demand is shadowed by volatile global energy and logistics costs.
Despite the positive volume growth, Kajaria Ceramics faces significant margin pressure from rising global energy and logistics costs. The company's EBITDA margins fell to 12.76% in FY25 from 15.28% in FY24, primarily due to geopolitical tensions in West Asia and around the Strait of Hormuz that have driven up LNG and natural gas prices. Power and fuel costs were nearly 20% of Kajaria's FY25 revenue, making the company vulnerable to supply issues despite its net cash position and use of biogas. Management has guided margins to remain stable at 17-18%, supported by pricing actions and cost-effective factors, but geopolitical events create significant hurdles for achieving these targets.
The brokerage estimates revenue/EBITDA/PAT CAGR of 8.0%/8.0%/13.6% over FY26-28E, as reported by Moneycontrol. Motilal Oswal forecasts even stronger growth with 11%/17%/20% CAGRs for revenue/EBITDA/PAT from FY24-26. The Indian ceramic tile market itself is forecast to grow 8.2% to 9.7% annually through 2028-2029, fueled by urbanization and home renovation. Management has guided margins to remain stable at 17-18%, supported by pricing actions and cost-effective factors, though analysts note that these projections might not fully price in ongoing cost inflation for materials and energy, plus shipping issues.
The positive long-term view is driven by market share gains amid industry disruptions, shift towards value-added products, strong brand and distribution network, and margin resilience, according to Prabhudas Lilladher's analysis. However, several risks shadow the company's outlook. Geopolitical tensions in West Asia and around the Strait of Hormuz have severely disrupted global shipping, while US tariffs are hurting export demand. The company's dependence on natural gas for plants in the south and Morbi makes it vulnerable to supply issues, and it has faced profit drops before, including a 26% fall in Q4FY22 net profit and a 58% PAT decrease in Q4FY25. Success will depend on its ability to pass on rising costs without losing sales volume.
