Detailed Narrative
Q4 FY26 Performance Overview
Kajaria Ceramics delivered a strong Q4 FY26, with consolidated revenue growing 12% year-over-year to INR1,373 crores. The company achieved an 11% volume growth, driven by sales unification efforts and demand momentum observed since January '26. EBITDA margin significantly expanded to 19.19% from 10.01% in Q4 FY25, attributed to cost optimization and improved sales realization. PAT for the quarter surged to INR136 crores from INR43 crores in the prior year.
Morbi Disruption and Market Dynamics
The Morbi region experienced significant disruption in March 2026, leading to a 7% fall in Kajaria's production due to plant shutdowns. Management noted that gas prices for Morbi players increased substantially from INR47-48 to INR84.50, necessitating a 35-40% price hike for their products. While Morbi plants are expected to restart from May 1, Kajaria anticipates that only 150-160 out of 500-600 plants will run, creating a vacuum that organized players like Kajaria can fill.
Gas Price Inflation and Fuel Mix
Gas prices saw a sharp increase, with North region prices at INR55.54 per SCM in Q4 FY26, rising to INR62.5 in April. South and West regions also experienced increases, with April prices at INR81 and INR79 respectively. Kajaria has implemented price increases of 12-13% in North and 16-17% in Morbi to cover these costs. The company utilizes biofuel, which constitutes about 15% of its overall fuel mix, with North plants using up to 30% biofuel in spray dryers, helping to mitigate gas price impact.
Volume Growth and Sales Strategy
The 11% volume growth in Q4 FY26 was a result of efforts towards sales unification, which involved inventory realignment and manpower alignment. Management indicated that volume growth in January and February was already 8-9% before the Morbi disruption. For FY26, overall volume grew 3%. The company expects continued good momentum in FY27, although Q1 is historically a weaker quarter for the industry.
Capital Allocation and Shareholder Value
Kajaria Ceramics acquired the remaining 15% stake in its bathware business for INR50 crores, which was previously held by a key investor. Management stated this was a strategic decision and a 'better allocation of cash' for the company. The working capital cycle improved by 14 days to 51 days as of March 31, 2026, primarily due to decreased inventory and receivables. The company also decided not to reinstate promoter salaries for the current year, demonstrating financial prudence.
Outlook and Strategic Initiatives
Management is confident in maintaining EBITDA margins between 18% to 19% going forward⏳. They anticipate a 'much better' year for FY27, driven by volume growth and price increases. The company plans to increase its ad spend by 40-50% in FY27 compared to FY26 (INR90-100 crores). Kajaria also aims to outsource '40 million plus' square meters of tiles in FY27, up from 32 million in FY26, adapting to the evolving supply landscape post-Morbi disruption.