Mehabe score: 4 G Factor: 3 Piotski Score: 4 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 4.
Description
Kajaria Ceramics Ltd is the largest manufacturer of ceramic/vitrified tiles in India. It manufactures, outsources and trades ceramic and vitrified tiles (under its brand name, Kajaria). In addition, KCL sells sanitaryware marketed under the Kerovit brand. It also ventured into the business of Plywood in the year 2018. The company’s manufacturing facilities are located at Sikanderabad (UP), Gailpur (Rajasthan) and Malootana (Rajasthan) and Srikalahasti (Andhra Pradesh) and have an aggregate capacity of 49.2 MSMPA (million sq. meter). In addition, the company has 21.2 MSMPA capacity under various subsidiaries/joint ventures, which takes the cumulative capacity to 70.4 million sq. meters.
Main Points
Diversification
The company diversified its business interests and entered the Sanitaryware business in 2017 and the Plywood business in 2018.
Presently, It has a sanitaryware plant in Morbi, Gujarat and a faucet manufacturing facility in Gailpur, Rajasthan. The capacity of the sanitaryware plant is 7.5 lakh pieces and that of the faucet plant is 1 million pieces.
For its Plywood business, It adopted an asset light model and tied-up with un-organised & semi-organised manufacturers in various parts of India.Site:KAJARIACER
Market Cap:
Rs 16,256 cr
Price:
1022.0
Trading pe:
70.5x
Book-value:
112/share
Div yield:
0.98 %
Earning yield:
2.03%
Face-value:
1.00/share
52week high:
1031.80
52week low:
350.40
Technical Analysis
Stock trades at 1022.0, above its 50dma 939.79. It also trades above its 200dma 787.57. The stock remains bullish on techicals
The 52 week high is at 1031.80 and the 52week low is at 350.40
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
– has been maintaining a healthy dividend payout of 20.01%
Weakness
– Stock is trading at 9.15 times its book value
-The company has delivered a poor sales growth of 5.13% over past five years.
Competition
– The industry trades at a mean P/E of 68.1x. Somany Ceramics trades at the industry’s max P/E of 114.78x. KAJARIACER trades at a P/E of 70.5x
– Industry’s mean G-Factor is 3.3 while the mean Piotski score is 7.0. KAJARIACER has a G-Factor of 3 and Piotski scoreof 4.
– Average 1 month return for industry is 24.0%. The max 1- month return was given by Nitco: a return of 55.04 %
Quarterly Results
Sales for period ended Dec 2020 is Rs 838.0 cr compared to Rs 741.0 cr for period ended Dec 2019, a rise of 13.1%
Operating Profits reported at Rs 182.0 cr for period ended Dec 2020 vis-vis 111.0 for period ended Dec 2019 .
Operating Margins expanded 673.9 bps for period ended Dec 2020 vis-vis Dec 2019 .
The EPS for Dec 2020 was Rs 7.48 compared to Rs 5.61 for previous quarter ended Sep 2020 and Rs 3.87 for Dec 2019
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 2480.0 cr for period ended TTM vis-vis sales of Rs 2808.0 cr for the period ended Mar 2020, a fall of 13.2%. The 3 year sales cagr stood at -2.9%.
Operating margins expanded to 17.0% for period ended TTM vis-vis 15.0% for period ended Mar 2020, expansion of 200.0 bps.
Net Profit reported at Rs 231.0 cr for period ended TTM vis-vis sales of Rs 255.0 cr for the period ended Mar 2020, falling 10.4%.
Company reported a poor Net Profit CAGR of -0.6% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 16.0% compared to 17.0% over the last 3 Years. – The stock has given a return of 177% on a 1 Year basis vis-vis a return of 25% over the last 3 Years. – The compounded sales growth on a TTM bassis is -17% vis-vis a compounded sales growth of 3% over the last 3 Years. – The compounded profit growth on a TTM basis is -15% vis-vis a compounded profit growth of 0% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 25.25% vis-vis 23.68% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 12.75% vis-vis 13.03% for Dec 2020
Conclusion
– is almost debt free.
– has been maintaining a healthy dividend payout of 20.01% – Stock is trading at 9.15 times its book value
-The company has delivered a poor sales growth of 5.13% over past five years.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 939.79 and is trading at 1022.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
