Kajaria Ceramics Q3FY18: Topline to grow at a CAGR of ~13% over FY17-20E; Buy

SKP Research | Feb. 12, 2018, 4:47 p.m.


Better economic growth, leaving more disposable income for discretionary life style consumption, rapid urbanisation, changing customer preference towards quality branded products particularly amongst the growing mass affluent, increasing nuclear families and Governments’ thrust on “Housing for All” coupled with strong brand equity and recall and distribution network, augers well for the company. It has de-risked its growth strategy with an asset light business model, adopting a joint venture route.

We have valued the stock on the basis of P/E - method of relative valuation - of 30x of FY20E earnings. In view of the sharp correction in the share price to Rs 615 now, after a stupendous rally to a life time high of Rs 788 recently, we recommend a BUY on the stock with a target price of Rs 750/- (~23% upside) in 18 months.

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