Release Date: October 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kajaria Ceramics Ltd (BOM:500233, Financial) reported an 8.5% year-on-year growth in tile volumes for Q2 FY25, outperforming the industry average of 2-3%.
- The company's consolidated revenue increased by 5% compared to the same period last year, reaching INR1.79 crore.
- The Adhesives segment showed significant growth, with revenue increasing by 40% to INR18 crore in Q2 FY25.
- The company expects the demand outlook to improve in the second half of the fiscal year, with better performance anticipated compared to the first half.
- Kajaria Ceramics Ltd (BOM:500233) has a strong dealer network with 1,850 dealers across India, providing a positive feedback loop for future demand.
Negative Points
- EBITDA margins were soft at 13.5% for the quarter, impacted by losses in the Bathware division and additional overheads from the Keronite unit.
- The plywood segment experienced a significant decline, with revenue decreasing by 26% in Q2 FY25 compared to the previous year.
- India's tile exports fell by 15% in the first five months of the current year, largely due to increased ocean freight rates and container shortages.
- The company's PAT for the quarter decreased by 22% to INR84 crore compared to INR108 crore in the same period last year.
- Working capital days remained flat at 59 days, with efforts to reduce it to 50 days by the end of March, indicating potential inefficiencies in inventory and receivables management.
Q & A Highlights
Q: What is the outlook on gas pricing and its impact on the tile business in India?
A: Ashok Kajaria, Executive Chairman, stated that gas prices have not changed significantly in the first six months of the financial year. The company is using biofuel to offset some costs, and there is no major change expected in the short term. Long-term global LNG price corrections are uncertain and not within the company's control.
Q: How does the company view the demand outlook for the tile industry in the second half of the fiscal year?
A: Ashok Kajaria mentioned that the demand outlook is positive, with feedback from dealers indicating improvement. The second half is expected to be better than the first half, despite challenges such as excessive rainfall affecting the first half.
Q: Can the company improve its working capital days from the current 59 days?
A: Ashok Kajaria indicated that the company aims to reduce working capital days to 50 by the end of March, through better management of receivables and inventory.
Q: What is the company's strategy regarding government projects and their contribution to sales?
A: Ashok Kajaria stated that the company has a project team in place across different regions, aiming to increase government project sales by 25% compared to last year. The contribution from government projects is expected to rise from 10% to 12.5%-13% of total sales.
Q: How is the Nepal project progressing, and what are the expectations for this market?
A: Chetan Kajaria, Joint Managing Director, explained that the Nepal plant, with a capacity of 5.1 million square meters, was commissioned in September 2024. The company plans to ramp up sales over the next three to six months, targeting full utilization of the plant's capacity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
