Kajaria Ceramics Ltd - Strong topline growth in a challenging environment - Emkay

Reco: BUY
CMP: Rs 233
Target Price: Rs 275

- Revenue growth of 23% to Rs 4.4bn were encouraging but increasing fuel cost put pressure on EBIDTA margins, PAT Rs 258mn, +16% yoy, was in line with est

- Stand alone EBIDTA margins dropped to its lowest level in last five years to 12.3% owing to sharp increase in fuel cost. Conso EBIDTA margins dropped by 100bps to 14.8%

- Kajaria announced its Greenfield plan for production of Sanitaryware with investment of ~Rs 120mn and also brownfield capex of ~Rs 400mn

- In weak economic environment, Kajaria has been able to register strong growth. We believe margin pressure to subside going forward and reiterate our BUY reco.

Source : Equity Bulls

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