Target: ₹1,450

CMP: ₹1,275.95

Kajaria Ceramics has, over the years, solidified its presence as the primary pan-India tiles player, selling over 100msm in volume (industry size: about 2,070msm) in a highly competitive & fragmented market. Kajaria’s leadership position, strong brand salience, and large distribution network have helped it gain market share in the last decade (revenue CAGR: 10 per cent, 300bps above industry).

We expect market-share gains to sustain, with nearly doubling of capex intensity in FY23-26E (average spend: ₹3 bnpa) vs. the past 5 years. Besides, Company focus is on value-added projects for improving margins/return ratios in coming years. We bake-in revenue/PAT CAGR of 13/19 per cent over FY24-26.

Higher growth, better return ratios (over 15 per cent), and a healthy balance sheet have resulted in premium valuations, though current valuations adequately reflect the strong outlook for earnings. Kajaria, given its net cash balance sheet (BS) and superior brand, is a solid play in the tiles sector, with expanding reach to tier 2/3 cities.

Accordingly, we initiate coverage on Kajaria Ceramics with Add and TP of ₹1,450/share, based on FY26E 37x P/E. Any correction in stock price should be considered an opportunity to accumulate.