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Epic Research
Kajaria Ceramics (Buy)
CMP: ₹538.85
Target: ₹640
Kajaria Ceramics is a holding company. The company is a tile company engaged in the manufacturing and trading of ceramics, polished and glazed vitrified tiles. It offers products, including ceramic wall and floor tiles, polished vitrified tiles, glazed vitrified tiles, and sanitary ware and faucets. Its glazed vitrified tiles are marketed in metros and urban cities through its network, comprising Kajaria World, Kajaria Galaxy, Kajaria Studio and other multi-brand dealers. Its ceramic wall and floor tile range comprises tiles in various sizes, designs and finishes and caters them to all customer segments.
We saw marginally subdued demand and consumer sentiment in the sector for the last 3-4 quarters. Company enjoys better product mix and retail reach amongst its peers in organized industry. Liquidity measures taken by the government and RBI will boost consumer sentiment and spending. Kajaria is also the biggest beneficiary of NGT ban on Coal gasifiers (Unorganised players mostly) in Morbi (Gujarat). We see an increase in 11-13 per cent increase in next two years and PAT to grow at 15-18 per cent coming at around ₹274 crore and ₹330 crore in FY20E and FY21E respectively. We recommend buying stock at current levels for TP of ₹640 in the medium term.
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