Breaking Down Kajaria Ceramics Limited Financial Health: Key Insights for Investors

Peeling back the numbers behind Kajaria Ceramics Limited reveals a mixed but compelling picture for investors: consolidated revenue ticked down to ₹1,104.33 crore in Q1FY26 (vs. ₹1,113.69 crore in Q1FY25) even as seven‑year net sales climbed from ₹2,956.20 crore in 2019 to ₹4,635.07 crore in FY25 (CAGR ~8.5%), PBDIT rose to ₹626.18 crore over the same period, and short‑term swings included a Q2FY25 uptick to ₹1,186 crore and a Q3FY25 revenue of ₹1,164 crore with 7% volume growth; profitability shows sharp volatility-Q1FY26 PAT jumped 21% to ₹108.98 crore while Q3FY25 saw net profit slump over 25% to ₹77.74 crore-yet cash and balance‑sheet metrics signal strength with a net cash position of ₹590 crore in Q2FY25 and net debt/equity around -0.2x, even as long‑term debt rose to ₹714 million and total liabilities hit ₹37,554 million in March 2025; market sentiment is split-Jefferies cut to Hold after a 52% rally and the stock trades at about 40x FY26 estimated P/E, analysts' price targets span ₹799-₹1,695, and forecasts show FY27-28 EPS trimmed 3-4% while Nuvama sees 10-12% volume recovery-risks include repeated quarters of profit misses, higher input and inventory costs, and modest tile‑volume growth following the plywood division closure, offset by aggressive branding, a 1,600‑dealer network, capacity expansion and bathware/adhesives/plywood revenue targets for FY27; read on for a line‑by‑line breakdown of revenue trends, margins, leverage, liquidity, valuation positioning and scenario‑level implications for investors

Kajaria Ceramics Limited (KAJARIACER.NS) - Revenue Analysis

• Q1FY26: Consolidated revenue of ₹1,104.33 crore, down 1% YoY from ₹1,113.69 crore in Q1FY25 - impacted by weak tile-volume growth and closure of the plywood division.
• Q2FY25: Revenue of ₹1,186 crore, up 2% YoY from ₹1,162 crore in Q2FY24.
• Q3FY25: Revenue from operations rose 1% YoY to ₹1,164 crore with reported 7% volume growth despite a seasonally weak quarter.
• Q4FY24: Revenue from operations increased 3% YoY to ₹12.41 billion (₹1,241 crore) with a 5.5% rise in sales volume; however, profit declined due to higher costs and subdued demand.

• Seven-year trend (FY2019-FY2025): Net sales increased from ₹2,956.20 crore (2019) to ₹4,635.07 crore (2025), implying a CAGR of ~8.5%.
• PBDIT rose from ₹449.49 crore (2019) to ₹626.18 crore (2025), also reflecting ~8.5% CAGR - indicating operating profit growth roughly in line with sales expansion.

Kajaria Ceramics Limited (KAJARIACER.NS) - Profitability Metrics

The following section breaks down recent profitability performance for Kajaria Ceramics Limited (KAJARIACER.NS), highlighting quarter-on-quarter and multi-year trends, margin pressures, and key drivers behind swings in reported profits.

• Q1 FY26: Profit after tax (PAT) rose 21% year‑on‑year to ₹108.98 crore (vs ₹89.82 crore in Q1 FY25).
• Q2 FY25: EBITDA increased 31% year‑on‑year to ₹214 crore; EBITDA margin improved to 18% from 14% in Q2 FY24.
• Q2 FY25 (consolidated): Net profit declined 22% to ₹842.7 million, missing analyst estimates amid sluggish domestic demand.
• Q3 FY25 (consolidated): Net profit fell over 25% to ₹77.74 crore, below analyst estimate of ₹106 crore, reflecting margin pressure from soft demand.
• Q4 FY24: Net profit declined 5.2% year‑on‑year to ₹1.02 billion due to higher costs and subdued demand.
• Seven‑year trend (FY19-FY25): PAT rose from ₹228.75 crore in 2019 to ₹347.54 crore in 2025 - a CAGR of approximately 8.5%.

Drivers, headwinds and short‑term signals investors should factor into earnings outlooks:

• Demand cycle: Weak domestic demand materially compressed margins in Q2 and Q3 FY25.
• Input cost pressure: Rising raw material and energy costs impacted Q4 FY24 and subsequent quarters.
• Margin volatility: EBITDA margin improved in Q2 FY25 but downstream demand softness drove consolidated net profit misses.
• Multi‑year growth: Steady PAT CAGR (~8.5% over seven years) indicates structural earnings growth despite cyclical dips.

For broader company context and history, see: Kajaria Ceramics Limited: History, Ownership, Mission, How It Works & Makes Money

Kajaria Ceramics Limited (KAJARIACER.NS) - Debt vs. Equity Structure

• Long-term debt rose 12.5% to ₹714 million (from ₹635 million).
• Net worth increased 4.7% to ₹27,233 million (from ₹26,010 million).
• Current liabilities up 6.2% to ₹7,077 million (from ₹6,667 million).
• Total liabilities increased 6.1% to ₹37,554 million (from ₹35,392 million).
• Current assets grew 3.2% to ₹18,186 million (from ₹17,628 million).
• Fixed assets increased 9.0% to ₹19,369 million (from ₹17,764 million).

• Implied gearing (long-term debt / net worth): ~2.6% (714 / 27,233), indicating very low financial leverage.
• Current ratio (current assets / current liabilities): ~2.57 (18,186 / 7,077), reflecting strong short-term liquidity.
• Total liabilities to net worth: ~1.38 (37,554 / 27,233), showing liabilities exceed equity but with manageable long-term debt levels.

Kajaria Ceramics Limited (KAJARIACER.NS) - Liquidity and Solvency

• Net cash position: Reported at ₹590 crore in Q2FY25, up from ₹520 crore in Q1FY26.
• Net debt-to-equity: -0.2x as of September 2025, confirming a net cash stance on the balance sheet.
• Profitability supporting solvency: Profit after tax rose 21% in Q1FY26, strengthening retained earnings and liquidity buffers.
• Dividend signal: Interim dividend of ₹8 per equity share declared in Q2FY25, reflecting confidence in cash availability and solvency.

• Working capital dynamics: elevated inventory in Q4FY24 increased cash conversion cycle temporarily; subsequent quarters show recovery supported by volume growth and PAT expansion.
• Capital return & policy: interim dividend in Q2FY25 underscores liquidity comfort while maintaining balance sheet strength.

Kajaria Ceramics Limited (KAJARIACER.NS) - Valuation Analysis

• Current headline valuation: ~40× FY26 estimated P/E.
• Premium to 10-year average: ~+25%.
• Recent price momentum: +52% in past three months (trigger for Jefferies' downgrade on 23-Jul-2025).
• Analyst EPS revisions: FY27-28 EPS forecasts trimmed by ~3-4%.
• Volume growth revisions: FY26 expected volume growth reduced to 5-6% (previously ~9%).

• Price-target dispersion (₹799-₹1,695) signals high outcome uncertainty driven by: demand/volume slump, raw material and freight cost dynamics, and market share shifts.
• Consensus adjustments: modest EPS downgrades (3-4% for FY27-28) imply earnings resilience but slower near-term growth.

• At ~40× FY26E P/E, the stock already prices in steady volume recovery and margin stability; downside risk increases if FY26 volumes track the trimmed 5-6% rather than higher scenarios.
• Nuvama's bullish TP of ₹1,754 assumes stronger recovery (10-12% volumes in FY25E) - a best-case driver versus the more conservative street that cut targets post-earnings.
• With price targets spanning roughly a 2.1× range (₹799 to ₹1,695), position sizing should reflect valuation sensitivity to modest EPS/volume misses.

Kajaria Ceramics Limited (KAJARIACER.NS) - Risk Factors

Kajaria Ceramics Limited has shown resilience but faces recurring margin pressures and demand headwinds across recent quarters. The following risks are based on reported quarterly outcomes and company actions that materially affect profitability, cash flow and investor expectations.

• Recurring net profit declines: Multiple quarters of year-on-year profit contraction indicate operating leverage and vulnerability to demand shocks.
• Cost inflation and inventory build-up: Rising purchase and inventory costs compress margins when volume growth is weak.
• Segmental shifts and closures: Strategic moves such as the plywood division closure can reduce short-term revenue and require one-time costs.
• Dividend payouts amid earnings weakness: Interim dividends reflect confidence in liquidity but may constrain free cash for reinvestment during cyclical pressure.
• Demand sensitivity: Sluggish domestic tile demand directly affects topline and utilization of manufacturing capacity.

Investor-specific considerations:

• Margin sensitivity - a ~10-95% jump in key cost lines (Q4 FY24) shows that cost management and inventory control are critical to restoring profitability.
• Demand exposure - consecutive quarterly profit declines (Q2 FY25: -22%; Q3 FY25: -25%) highlight reliance on domestic tile demand recovery.
• Capital allocation - interim dividend of ₹8/share in Q2 FY25 signals ample liquidity but raises questions on balancing shareholder returns with reinvestment needs.
• Operational shifts - closure of plywood division (Q1 FY26) reduces revenue headroom in the near term and could incur restructuring costs.

For a view of the company's stated long-term direction and guiding principles, see: Mission Statement, Vision, & Core Values (2026) of Kajaria Ceramics Limited.

Kajaria Ceramics Limited (KAJARIACER.NS) - Growth Opportunities

• Nuvama Institutional Equities forecasts volume growth of 10-12% in FY25E, driven primarily by domestic real estate demand recovery and improved exports.
• Management guidance and analyst models project bathware revenues of ₹6.75 billion by FY27, with plywood and adhesives targeted at ₹1.25 billion and ₹1.5 billion respectively by FY27.
• The company has built an expansive distribution footprint-about 1,600 dealers-supporting faster market reach versus peers and enabling price and product mix advantages.

• Product diversification: Large addressable opportunity from bathware, plywood and adhesives complementing core tiles business-management targets combined non-tiles revenues approaching ~₹9.5 billion by FY27 (bathware + plywood + adhesives).
• Branding push: Advertising spend has grown at a CAGR of over 30%, materially higher than peers (12-13% CAGR), supporting premiumisation and market share gains.
• Capacity & distribution expansion: Continued capacity additions and an extensive dealer network underpin superior operational performance and faster conversion of demand into sales.
• Profitability outlook: Analysts expect revenue and PAT CAGRs of 15% and 32% respectively over FY23-26, with RoE and pre-tax RoCE maintained above 20%-indicative of strong return-on-capital metrics.