homebusiness Newscompanies NewsGoldman Sachs upgrades Kajaria Ceramics to buy, sees 18% upside on lower gas prices, competition
Goldman Sachs upgrades Kajaria Ceramics to buy, sees 18% upside on lower gas prices, competition
Kajaria Ceramics, which enjoys 36 percent revenue share within the organised listed players, posted an 11 percent volume growth and 18 percent revenue growth, during the first nine months of financial year 2023.
Shares of Kajaria Ceramics gained on Wednesday after brokerage firm Goldman Sachs upgraded the stock to buy from its earlier rating of neutral.
Goldman Sachs also raised Kajaria's price target to Rs 1,500 from Rs 1,200 earlier, implying a potential upside of 18 percent from Tuesday's close.
The upgrade came on the back of a favourable Renewable Energy cycle considering a 13 percent volume growth until financial year 2026, lower gas prices and benign competitive intensity.
“While RE cycle and gas cost benefits are well understood, export market dynamics are not,” noted Goldman Sachs in its report.
Kajaria Ceramics, which enjoys 36 percent revenue share within the organised listed players, posted an 11 percent volume growth and 18 percent revenue growth, during the first nine months of financial year 2023.
The company is also targeting to double its consolidated revenue in the next 5-6 years. Stable gas prices can aid the company’s profit margins going ahead.
Kajaria increased its capacity from 70.4 million square metres (msm) in FY22 to 81.6 msm in financial year 2023 (excluding capacity of Vennar Ceramics) and the management believes that they will have to increase capacities by 10-12 msm every year to achieve their target revenue CAGR (compounded annual growth rate) of 15 percent.
Shares of Kajaria Ceramics are trading with gains of 2 percent at Rs 1,294.
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