Basic analysis of Khazaria pottery

Basic analysis of Khazaria pottery: Tiles improve the aesthetics of your floor. The construction of new residential homes and commercial properties drives the growth of the tile industry, which makes a significant contribution to interior design. In this article, we fundamentally analyze Kajaria Ceramics’ trading in the tile industry.

Basic analysis of Khazaria pottery

Company Overview

Ashok Kajaria founded the company and incorporated it in 1985. Kajaria Ceramics is India’s largest ceramic/vitrified tiles manufacturer and the eighth largest in the world. It currently has an annual production capacity of 86.47 million square meters across seven plants located in Sikandrabad, Uttar Pradesh, which was started in 1988. There are two in Gailpur, Madhya Pradesh, Malootana in Rajasthan, two in Morbi in Gujarat, Srikalahasti in Andhra Pradesh and Balanagar in Telangana.

Over the past 35 years, Kajaria Ceramics has increased its capacity from 1 million sqm to 86.47 million sqm and now offers more than 3000 options in ceramic wall and floor tiles, vitrified tiles, designer tiles, etc.

segment analysis

In FY23, the company earned 91.03% of its revenue from tiles (manufacturing and trading of ceramic and vitrified wall and floor tiles), while the remaining 8.96% came from others (manufacturing of sanitary ware and trading of plywood and blockboard).

industry analysis

The Indian ceramics industry is expected to grow at a CAGR of 8.49% from 2023 to 2028. Globally, India is one of the fastest growing ceramic tile markets.

Some of the major factors driving the growing demand for ceramic tiles in India are the expansion of the real estate sector and government policies that promote rapid growth in the housing sector.

Additionally, the demand for ceramic tiles is increasing in India due to rising disposable income and desire to beautify living and working spaces.

Demand for new touchless products and other hygiene-focused products for use in baths and germ-free tiles will gain attention and traction. Government initiatives such as ‘Pradhan Mantri Awas Yojana’ and ‘Smart Cities’, among others, are likely to provide additional impetus to the sector.

India is experiencing rapid growth, with 36% of the population expected to live in cities by 2022. It is also expected to reach 40% by 2030, reaching 600 million urban residents. Expansion of cities and migration of people are the main causes of urbanization in India.

Khazaria Pottery – finance

Sales and Net Profit

The company’s revenue was Rs. 4,381.93 crore in FY23 compared to Rs. It increased by 18.26% to ₹3,705.19 crore in FY22. Sales were consistent from FY19 to FY21, with sales increasing in FY22 and FY23.

The net profit was Rs. 346.20 crore in FY23, down from Rs. 382.74 crore in FY22, down -9.54% YoY. CAGR recorded 10.87%. After increasing profits from FY19 to FY22, there was a slight decline in FY23.

profit

Operating profit margin (OPM) stood at 10.26% in FY23 compared to 13.21% in FY22. The five-year average was 14.35%. Over the past five years, OPM has fluctuated, with margins at their highest in FY21. The margin decline was caused by an increase in variable costs such as raw materials.

NPM was 7.86% in FY23 compared to 10.17% in FY22. The five-year average was 9.18%. NPM fluctuated over five years. However, the decrease in net profit margin is due to the increase in interest and depreciation costs and the impact on operating profit.

rate of return

RoE stood at 15.60% in FY23 compared to 19.21% in FY22. The average was 16.66%. RoE fluctuated over 5 years. Returns in FY23 are below average, while returns in FY22 are the highest.

RoCE was 20.26% in FY23 compared to 24.79% in the previous year. The five-year average was 21.86%. Rate of return indicates that a company has utilized its resources efficiently to generate good returns for shareholders.

debt analysis

The debt-to-equity ratio has been consistently low over the past five years, with the most recent figure being 0.09 in FY23. A low D/E keeps the capital structure stable and the cash flow of the business intact.

The interest coverage for FY23 is 21.64 times, which is a comfortable level for the company. A higher ratio means the company has earned enough profits to cover 21 interest payments. This indicates that the company is in a position to secure additional funding for expansion.

key indicators

Let’s take a look at Kajaria Ceramics Ltd.’s key indicators.

Kajaria Ceramics – future plans

• Real estate growth, fueled by government support for infrastructure improvements, could help business growth in the medium term by providing large tracts of land that could help grow the tile industry.
• Expanding real estate sector in second- and third-tier towns, emergence of new residential homes and demand for Class A buildings (highly connected commercial properties) can all contribute to the growth of the industry.
• Reducing your dependence on natural gas by increasing your use of biomass can improve your production capacity and contribute to continued profitable business growth.

conclusion

As we near the conclusion of the article, let’s take a quick look at the fundamental analysis of Kajaria Ceramics. With its growing exposure to the real estate sector, Kajaria Ceramics has the potential to scale up to meet demand. The economy suffered during uncertain times such as COVID-19, leading to a business downturn, and the company performed better in FY21. The company has strong fundamentals and sales growth. However, better cost management can help increase profitability. What do you think about the company’s growth? Let us know your thoughts in the comments section below.

Written by Santosh

By leveraging the Stock Screener, Stock Heatmap, Portfolio Backtesting and Stock Comparison tools on the Trade Brains portal, investors have access to comprehensive tools to identify the best stocks, stay updated and informed with stock market news. invest.