Building materials makers eye faster growth owing to buoyancy in realty demand

The tile and ceramic makers are on a strong footing with robust demand from its end-user industry, realty. Largely attributed to low interest rates, work from home model and pent-up demand for renovations have helped sales of fixtures and other home-building items like tiles. Alongside, demand for new houses is surging, apparent in the all time residential sales bookings of realty players like Godrej properties, Sobha, DLF during FY23. But not just residential real estate, commercial real estate demand is also gaining pace in India along with the new co-working spaces in offices which are attracting corporates, especially start-ups.

A direct beneficiary of the robust demand in real estate are the building materials makers. Tiles and ceramics maker, Kajaria is a leading player in the tiles and ceramic industry with 36 percent revenue share within the organized listed players (in 9M-FY23). The tiles and ceramics maker posted robust 11 percent volume growth for the second consecutive year and 18 percent revenue growth in FY23 to Rs 4,382 crore, nearly doubling in the past two years. Peer, Somany Ceramics also posted robust 18 percent revenue growth in the past financial year at Rs 2,479 crore.

To cater to the rising demand, a large-sized tiles plant in Gujarat shall be commissioned by Somany Ceramics in the first half of FY24. On similar lines, Kajaria Ceramics will be modernizing its Rajasthan plant and expanding its capacity in Uttar Pradesh to produce more valued added tiles. With this, Kajaria is targeting to double its consolidated revenue in the next 5 to 6 years. Analysts on the Street expect stable gas prices to provide a fillip to margins to these ceramics and tiles makers.