Kajaria Ceramics Ltd:-Buy/sell: multibagger

Scripscan:Kajaria Ceramics Ltd

Code:500233

cmp:115

Story:Kajaria Ceramics Limited manufactures ceramic floor and wall tiles inIndia. It offers approximately 500 designs of ceramic glazed tiles, vitrified polished and glazed tiles, and highlighters under the Kajaria name. The company also imports glazed vitrified tiles in various sizes with rustic, matt, satin, wood, and metal finishes for wall and floor applications under the Kajaria Eternity name. In addition, it markets sanitary wares, steam rooms, message bathtubs, shower rooms and panels, and bath cabinets under the Kerovit name. Further, the company manufactures specialized floor tiles for various needs of heavy footfall spaces, pavements, landscapes, living rooms, kitchens, and bathrooms. It sells its products through showrooms and retail outlets under the Kajaria World name, as well as through dealer and sub-dealer networks. The company also exports its products to approximately 20 countries through a network of international agents and distributors.The company posted a strong set of numbers for Q1FY12. YoY net sales rose 39% at Rs.271 crore. What helped was strong demand, margins were better due to higher quotient of value added products and average realisations were up 10% to Rs.282/sq.mtrs. Total sales volume rose 34% while manufacturing volumes rose 30%. Raw material cost was up 97% and power and fuel cost was up 100% mainly on the back of higher gas prices. EBIDTA was up 39% at Rs.43 crore and EBIDTA margin remained steady at 16%. Net profit was up 54% at Rs.17 crore and NPM was also steady at 6%.The better margins are up on account of higher product mix of vetrified tiles, which costs more than ceramic tiles.FY12 is expected to see the full advantages of the 30% increased capacity in vetrified tiles. It is also expanding capacity from current 2.3 mln sqm to 4.6 mln sqm at the recently acquired Soriso Ceramic plant, at a cost of Rs.13.50 crore. This expansion is expected to go on stream in FY13.Current fiscal is expected to see volume growth and high margins keeping the story intact.A hold at present levels and a good buy below 100 rs.

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