(CMP – Rs. 1017; MCap – Rs. 16,183 crore)

Kajaria Ceramics reported a strong set of numbers as it reported superior volume growth that spilled over to operating leverage at EBITDA and PAT levels.

Summary of T4FY21 Revenue

– Kajaria’s sales volumes grew 39.2% year-on-year to 25.4 MSM and much better than our estimate of volume growth of around 24%), driven by a stellar rebound in demand and a benign base (T4FY20 experienced a 19% drop in volumes)

– Revenue increased 46.1% year-on-year to Rs. 952.5 crore and was above our estimate of Rs. 841.8 crore due to higher than expected volume and achievements ( up 2.8% year-on-year). Tile revenue increased 43.1% year on year to Rs. 865.8 crore. Revenues from faucets and sanitary ware increased 73% year-on-year to Rs. 71.3 crore. Plywood revenue grew 165% yoy to Rs. 15.3 crore, on a low basis

– The company reported an EBITDA of Rs. 190.9 crore (our expectation: EBITDA of Rs. 168.4 crore). Resulting margins at 20% increased by 573 basis points year-on-year thanks to the benefits of operating leverage

– The beating operating performance spread to PAT where it reported a Rs. 127.1 crore (against our expectations of Rs. 107.1 crore) up 156.3% year-on-year

– Working capital was 50 days versus (55 days in Q3) and much less than 73 days in Q4FY20, coupled with good generation of operating cash flow. As a result, net cash improved to Rs. 349 crore in Q4FY21 (vs. Rs. 107 crore in FY20)

While the first quarter of fiscal 22 will be affected by the second wave, we point out that the sales volume growth momentum has been much better than expected (initially driven by level II / III cities) and that a Strong recovery is again likely. Kajaria, with a net cash balance and relatively resilient performance given its superior brand and leadership, is expected to remain a key beneficiary of the recovery in demand going forward. We will review our estimates, rating and target price and post the detailed update shortly after the conference call.

Shares of KAJARIA CERAMICS LTD. was last trading on BSE at Rs.1016.35 from the previous close of Rs. 1021.7. The total number of shares traded during the day was 33,647 in more than 2,867 transactions.

The stock hit an intraday high of Rs. 1,054.15 and an intraday low of 1,009.95. The net turnover during the day was Rs. 34,754,147.

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