Kajaria Ceramics Limited

Kajaria Ceramics reported a flat consolidated revenue of ₹1,168 crores in Q3 FY26 compared to the previous year. Despite this, the EBITDA margin significantly improved by 442 basis points YoY to 17.2%, though it saw a sequential drop of 74 basis points. Profit Before Tax (PBT) surged by 49% to ₹165 crores, and Profit After Tax (PAT) increased by 13% to ₹88 crores, reflecting strong cost optimization efforts. Working capital days increased by 8 days sequentially to 64 days as of December 2025.

The company's 'Kajaria 2.0' transformation journey is underway, focusing on moving towards value-added products. A key initiative in Q3 FY26 was the liquidation of excess SKUs, which led to lower sales realization due to discounts. Management stated this was a strategic move to reduce commonality across product verticals and make plants more efficient, expecting to emerge stronger in terms of stock efficiency and overall operations.

The Tiles segment's revenue remained flattish year-on-year at ₹1,030 crores. In contrast, the Bathware segment registered a healthy 9% growth in revenue, reaching ₹103 crores. The Adhesives business demonstrated robust growth, with revenue increasing to ₹35 crores from ₹20 crores in Q3 FY25. As part of its strategy, Kajaria converted one unit at its Gailpur plant, with a capacity of 9.1 million square meters, from ceramic floor tiles to glazed vitrified tiles to cater to prevailing market demand for higher-value products.

Indian tile exports experienced a 20% decline in value in FY25, reaching an estimated ₹16,000 crores, down from ₹20,000 crores in FY24, primarily due to increased freight rates and geopolitical disturbances. Management noted that the decline in exports leads to the closure of many Morbi-based export-oriented factories, thus mitigating significant domestic pricing pressure. The company anticipates the organized sector's market share to reach 50% within the next 2-3 years, up from the current 40%.

Kajaria is intensifying its focus on cross-selling across its dealer network, with 70-75% of this unification process already complete. A major thrust is being placed on engaging with the architect and interior designer community, a segment not heavily focused on previously. The company also plans to strengthen its government projects team. No major capital expenditure is planned for the next 1-2 years, with the aim to increase cash balance and potentially enhance dividend payouts. Kajaria is also working towards converting one of its joint ventures into a wholly-owned subsidiary for improved efficiency and tax benefits.

The average gas pricing in Q3 FY26 was stable at ₹37-38 across regions, with a marginal increase of ₹1 expected in Q4. Management clarified that the overall impact of gas price increases on power and fuel consumption is minimal (4-5%), projecting a financial impact of only ₹50-80 lakhs in the next quarter. In the bathware portfolio, a price hike of 8-12% was implemented for faucet products in January 2026, with a similar move planned for sanitaryware from March 1st, 2026.