Tiles Sector Check - Export Robust Growth, Domestic Demand Slow: Prabhudas Lilladher

Prabhudas Lilladher Report

We recently visited Morbi, Gujarat to gauge demand, supply, price scenario along with gas pricing in Morbi. We met tiles players with turnover of Rs 1 billion -Rs 15 billion operating in public/private/ partnership.

Our channel checks suggests -

1. Domestic demand scenario remains sluggish, due to slowdown in retail and delay in real estate construction activities,

2. Exports grew at 46% until October 24, while November 23 witnessed slowdown (expected 25%-32% growth in FY24),

3. 40 new plants are upcoming in Morbi. (mostly of glazed vitrified tiles),

4. Gas prices (Gujarat State Petronet Ltd. and Propane) increased by ~12% during May-November 2023,

5. Most of the large Morbi plants have dual fuel options (propane/ Gujarat Gas) capacity, currently Morbi uses is 50:50 for Gujarat Gas/propane, and

6. Premiumisation is the theme going on for mid-long term in tile industry.

Under our coverage universe, we maintain our volumes (11.1% compounded annual growth rate over FY23-26) and earnings estimates (24.3% CAGR over FY23- 26) for Kajaria Ceramic Ltd.

Maintain ‘Accumulate’ with target price of Rs 1,368 (35 times September ’25 earning per share).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.