Sharekhan’s research report on Kajaria Ceramics –
Better-than-expected performance for Q4 led by strong tile volume growth and improvement in realizations. Bathware and Plyboards registered strong growth y-o-y on a low base. Demand optimism leads to brownfield expansions to be completed by FY2022 end at a capex of Rs. 250 crore with an incremental revenue potential of over Rs. 500 crore. Strong net cash position and healthy free cash flow generation to aid in capex plans without leveraging the balance sheet.
We retain Buy on Kajaria Ceramics with a revised PT of Rs. 1270, led by an upward revision in estimates and a strong 29% CAGR in net earnings estimated over FY2021-FY2023E.
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