KAJARIACERNSEOctober 22, 2025

Kajaria Ceramics Limited

7,486words
134turns
17analyst exchanges
6executives
Management on call
Ashok Kajaria
CHAIRMAN – KAJARIA CERAMICS LIMITED
Chetan Kajaria
VICE CHAIRMAN – KAJARIA CERAMICS LIMITED
Rishi Kajaria
MANAGING DIRECTOR – KAJARIA CERAMICS LIMITED
Sanjeev Agarwal
- CHIEF FINANCIAL
Parveen Gupta
DEPUTY VICE PRESIDENT,
Ritesh Shah
INVESTEC CAPITAL SERVICES INDIA PRIVATE LIMITED
Key numbers — 40 extracted
INR1,186 crore
senior management team of Kajaria Ceramics. In quarter 2 F '26, our consolidated revenue stood at INR1,186 crores, a marginal growth of 1% year-to-year compared to the corresponding period last year, mainly due
1%
mics. In quarter 2 F '26, our consolidated revenue stood at INR1,186 crores, a marginal growth of 1% year-to-year compared to the corresponding period last year, mainly due to low growth in tiles
rs,
es volume and absence supply sales due to the closure of this division. During the last two quarters, market remained soft. Our sales growth was minimalistic, yet the company achieved a good operating
INR1,051 crore
this quarter segment-wise financial performance. Tile segment remained flattish year- to-year, at INR1,051 crores compared to INR1,054 crores in quarter 2 F '25. Bathware segment registered a 14% growth in reve
INR1,054 crore
inancial performance. Tile segment remained flattish year- to-year, at INR1,051 crores compared to INR1,054 crores in quarter 2 F '25. Bathware segment registered a 14% growth in revenue, reaching INR102 crores
14%
at INR1,051 crores compared to INR1,054 crores in quarter 2 F '25. Bathware segment registered a 14% growth in revenue, reaching INR102 crores compared to INR90 crores in quarter 2 F '25. Revenue
INR102 crore
INR1,054 crores in quarter 2 F '25. Bathware segment registered a 14% growth in revenue, reaching INR102 crores compared to INR90 crores in quarter 2 F '25. Revenue from Adhesives grew to INR32 crores in qu
INR90 crore
2 F '25. Bathware segment registered a 14% growth in revenue, reaching INR102 crores compared to INR90 crores in quarter 2 F '25. Revenue from Adhesives grew to INR32 crores in quarter 2 F '26 as compared
INR32 crore
ching INR102 crores compared to INR90 crores in quarter 2 F '25. Revenue from Adhesives grew to INR32 crores in quarter 2 F '26 as compared to INR18 crores in quarter 2 F '25. EBITDA further improved in qu
INR18 crore
quarter 2 F '25. Revenue from Adhesives grew to INR32 crores in quarter 2 F '26 as compared to INR18 crores in quarter 2 F '25. EBITDA further improved in quarter 2 F '26 to 17.94%, plus 122 basis points
17.94%
'26 as compared to INR18 crores in quarter 2 F '25. EBITDA further improved in quarter 2 F '26 to 17.94%, plus 122 basis points sequentially and plus 447 basis points year-to-year. PAT for the quarter g
122 basis point
ed to INR18 crores in quarter 2 F '25. EBITDA further improved in quarter 2 F '26 to 17.94%, plus 122 basis points sequentially and plus 447 basis points year-to-year. PAT for the quarter grew by 58%, to INR133
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Guidance — 20 items
Management
qa
“Like in the next 2, 3 quarters, there will be more savings.”
Management
qa
“So going forward, I think it is -- it should be a little better only from here.”
Management
qa
“Like even in this month, we did some reasonably good savings in certain materials, so which will be reflected in Q3 and Q4.”
Management
qa
“See project builders, we're always tapping.”
Management
qa
“But we have to work on all the fronts, whether it is a dealer network or the project network to look at volumes.”
Management
qa
“So difficult to project what will be the ratio going forward.”
Management
qa
“But when we will reach 20% or 21% -- because even that 20% is not comparable with this margin because this margin is based on the overall cost optimization.”
Sagar Jagtap
qa
“So this year, I just wanted how do we see the number going forward in the year?”
Management
qa
“So as we said, our retained 2 project mix is roughly 70% to 30% and that 30% includes both private and government projects and builders.”
Management
qa
“But as we said, we are more focused and aggressive on getting more project volumes also as we keep on going forward.”
Risks & concerns — 6 flagged
I think it's difficult to quantify right now, but you are seeing the difference from first quarter.
— Management
So difficult to project what will be the ratio going forward.
— Management
Projects segment, we are putting more emphasis and more pressure on that so that we can get more volumes there.
— Management
So it's very difficult to quantify how the ratio of government and projects with private builders will keep on changing within that mix.
— Management
It's just why tile demand has been so weak.
— Pulkit Patni
I answered that point, not only tiles, all kind of building material, except cement and steel, which go into the building industry has been weak.
— Management
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Q&A — 17 exchanges
Q
Congratulations on strong set of margin, multi-quarter high margin. I want to understand on cost, you have alluded you are doing cost rationalization. I want to understand more how the progress has been in this quarter, possibly, if you can speak some line item by line? And what sort of more reduction is possible in upcoming quarters? And how long will this journey go on? As you highlighted multiple quarters, will this journey get over in FY '26, '27?
Management
So in terms of cost reduction, we have taken significant steps, for example, reengineering of the packing boxes across all our plants across the country, which has resulted in substantial savings of INR30 crores, INR35 crores on an annual basis. Plus we've also worked on reducing our purchase price and outsourcing of tiles of ceramic and polished vitrified, removed a lot of people, around 250 people. So a lot of work has gone behind the scenes to rationalize the cost, which you have seen in the results. Got it. So whatever is there, is done or possibly more sort of reduction is possible on emp
Q
Okay, sure. So just to begin with, can you share some initial feedback from, let's say, distributors. It's been a few months of this unification. Any feedback that you can share how the feedback from the distributor or the influencers, customer set, both on the positive or negative side, if you can share something or any challenges that we've been facing on positive side, that would be great.
Management
So we'll start individually. From the distributor point of view, they're very, very happy. So earlier, what used to happen was, three people used to go to a single dealer. And now we have reduced that to one. And if it's a very, very big dealer, maybe two. But overall, we are very happy that they don't have to answer to so many people. Coming to architects, influencers, we were never there. We never serviced them. So recently, about a month back, we started making a team, and we already have about 18, 20 people who are on board. And we're going to further strengthen the team. Their job is only
Q
Congratulations on great margins. Just a couple of questions from my end, while you spoke about employee expenses coming down further and other expenses also coming down. What I wanted to understand is power and fuel cost too is down this particular quarter, what would be the reasons here for savings? Is it an industry-led phenomenon?
Management
Power and fuel remains the same. Power and fuel is lower because of the lower production, Sneha. Cost is the same. Understood, sir. And any numbers that we can get, how much further reduction can we get? I know the previous participant has already asked this. But maybe in terms of raw material expenses also, while you were saying there could be some savings there also and how are those savings coming up in raw materials? So Sneha work is on continuously. We can't quantify the exact savings as of now, but we're constantly working on the raw materials also wherever we can save cost at the factor
Q
Congratulations for such a strong performance. The information which I'm getting from the dealers at the ground level that business and overhauling the business, which has resulted in a lot of...
Management
Q
Can you hear me now?
Management
Q
So, I was saying at the ground level, what I've checked with the dealers, that there's a lot of reinventing of the businesses which is happening and overhauling of the business operations, which has resulted in a lot of cost savings. And plus the charge you have given to the younger generation, Chetan and Rishi, to run the business is an excellent -- I think, excellent move by you. And I must congratulate both Chetan and Rishi to coming on board and doing such an excellent job. So my question out here is with such a strong performance, obviously, other people have also asked this question, gro
Management
Two questions you asked regarding the volume growth. As already said by Chetan and Rishi just now, with this transition of hiring a management consultant also, we are doing a lot of work on the ground level as to identify which are nonperforming dealers, which areas we are not there. So I think that will add value. Plus, an architect team has been installed, which was literally not there in Kajaria because there were three divisions working independent of each other. Now with this unification, that is going to help, number one. So, volume growth has to come, no questions about it. And as far a
Q
Government projects last year at 10% volume. So this year, I just wanted how do we see the number going forward in the year?
Management
So as we said, our retained 2 project mix is roughly 70% to 30% and that 30% includes both private and government projects and builders. So it's very difficult to quantify how the ratio of government and projects with private builders will keep on changing within that mix. But as we said, we are more focused and aggressive on getting more project volumes also as we keep on going forward. And next, how is pricing in Morbi versus branded segment evolving this quarter? Pricing gap between Morbi and Kajaria is about 20%, and that remains. Okay. And other expenses, advertisement expenses first quar
Q
I have two questions. So one is as everybody were asking margin. So you said you -- there were some initiatives which led to -- one of them was reengineering the packaging across all your factories, which led to INR35 crores of annual savings. So but when I look at this quarter, on quarter-on-quarter, sequential quarter basis, there has been INR30 crores of additional EBITDA. And when we compare it on Y-o-Y basis, there is an excess of around INR70 crores of additional EBITDA despite the revenue being flattish. So I just want to understand in brief, how are we be able to optimize the cost. At
Management
It has not come down a lot. But as we move around, it will not go up. There could be slightly saving in the employees as we have not given increment in this year. And some people may be relieved may go and we are not intending to hire any fresh people. So with the growth of sales, the percentage of employee cost of sales will go down, one. And what was the other question. Yes, it was around EBITDA. I just wanted to understand the triggers which will -- this 17% margin to 20%, 22% margin… You are comparing previous year margin with this time, the cost savings. So last year, there were some loss
Q
Ashok Ji, it's uncommon to see the promoter directors voluntarily foregoing salaries in a fiscal year, and that's obviously commitment. The question is, how does the management now ensure that the best-in-class and capability employees are "ring-fenced" amid this internal restructuring as typically low-quality employees who are forced to leave, but the high-quality ones may voluntarily resign and they move on, right? So how do we make sure that the resultant organization is stronger actually?
Management
That's what we are trying to do. See, that's what the goal is to make the organization leaner and more effective. And the management not taking a salary was a bold decision. Let me tell you that after a lot of deliberation because 2 reasons. One, we didn't give any increment to our people this time. So as a management, we said, let's not let the company become stronger. So that's point number one. Point number two, the whole effort is to make it as lean and thin as possible, effective, but lean and thin. So that's what we are trying to do, and it's working. It's working in the right direction.
Q
So the increase in the dividend payout is linked to the performance or increase in the margin. So this is sustainable or this is a one-off phenomenon you have done?
Management
So it's not one off. It is a dividend -- we have paid as per the dividend policy. We have a dividend policy to pay between 40% to 50% of our earnings. So we have -- this is not for the first time we have paid. We have been paying for the last 3, 4 years. It's just the increase in the dividend payout. That's what I'm asking. I know you have been paying interim dividends for the last 3, 4 years. So regarding interim, we have increased a bit as compared to the last 2 years. But overall dividend will remain within the policy, unless the Board changes the policy. Okay. And you have mentioned that t
Q
I mean, enough has been said about how the management has actually put in the best effort to cut costs. I think the one question which we are all grappling with is what is actually happening to demand, sir? Like in your view, your experience of doing this business for more than 2, 3 decades, why is it that for the last 3 years, demand is so seeded? What do you think needs to change for demand to come back? And as a management, while you're doing all the right things to cut costs, but I don't see that optimism in terms of demand, given that a lot of the initiatives you are doing are quite perma
Management
I think a lot of answers have been given, and you are missing a few points. Point number one, there is a unification which has been done by Kajaria. You see what has happened, as you are aware, last 2 years, there was a commonality in products between ceramic and clay-certified division. As a result, what we decided that starting from this financial year, we'll do unification, number one. Number two, with this unification, a lot of corrections are to be made, as said earlier by Rishi for a dealer till 31st of March, 3 people were vesting. Now people are vesting from Kajaria. So efficiency of t
Q
A couple of questions. First is, sir, you did indicate that we have appointed a management consultant and the target is to enhance market share. Sir, can you highlight a few underlying variables that we look to target over here? I think you did touch upon incentives being rechecked. But anything specific on product pricing, discounts? How should one look at it? Because we have the brand, we have the distribution, incrementally what next?
Management
So a couple of things. First, like mapping the country state by state, seeing where the dealers are not as -- the Chairman also said, the dealers are not performing, where we are not there present when the competitors are. We're doing a deep analysis state by state of the country and identifying those areas where we can penetrate deeper and strengthen our distribution network. That's also focusing where we can make more exclusive showrooms as we go along. Currently, we have 450 exclusive showrooms of Kajaria with 1,850 dealers. Our target is to increase that more in the next couple of years an
Q
Sir I just wanted to ask if you were adding any new capacities. And if I heard you correctly, you said 20% EBITDA margins from Q3 or Q4?
Management
No, we never give you any figure like that. We have never specified any EBITDA margin. We have always said there will be some cost optimization reduction. And how much it will result into EBITDA margin, we cannot say because EBITDA is not a result of cost optimization. It's a combination of cost, selling price, gas price. So the other factors are not in our hand. So we cannot -- we have never guided for 20% EBITDA margin. We have always said that we are in the process of cost optimization. And every quarter, there will be some improvement as far as our costs are concerned. And your first quest
Q
So how much was the ad spend as a percentage of your absolute number for the H1 and what is the target for this year?
Management
We spend roughly -- what was the question? Ad spend -- how much was the ad spend for H1 of this year? And what is the target for this year? I don't have the numbers ready, but this H1, the ad spend was lower than the last half year. Okay. So as you highlighted, the ad spend is lower. So possibly the target is to lower it or possibly maybe because of ad spend some... We intend to increase it in the second half. And the lower -- the reason for the lower ad in the first half was also that we did not do this dealer contract, which we used to do in Thailand. For 6 months. And we now -- next 6 month
Q
So how much this unification -- because of this unification, how much volumes you would have lost? And also by closing down one of the business, approximately how much you would have lost?
Management
Sorry? So because of unification, we will not be able to quantify what volumes we have lost. What we are saying is that our main focus was more on strengthening the organization and for that, in that integration we could have lost some sales. We cannot deny that, but it's not possible to quantify that. Because the sales people, dealer, I mean, they are just having a new thing to them. Correct. Everything is new. So there will -- it's a very adjustment -- very insignificant figure. We have not lost out on sales as such. Yes. Hello. Hello.
Q
Yes. Thank you. I think there is no question -- there's no participant left for the questioning. So can we conclude the conference?
Management
Q
Yes. Thank you all for joining on to the conference call. Ashok and team, thank you so much for calling us. It's an opportunity to host you. Thank you so much, sir.
Management
Thank you, Ritesh, for organizing this. I thank all on behalf of all of us and wish you all a very, very happy Diwali. To all the participants and all of you, wish you a very, very happy Diwali. Thank you.
Speaking time
Management
61
Moderator
19
Keshav V. Lahoti
15
Onkar Ghugardare
7
Ritesh Shah
6
Sneha Talreja
6
Sajal Gupta
4
Shaleen Kumar
3
Sagar Jagtap
3
Raman KV
3
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Opening remarks
Ritesh Shah
Thanks, Samarth. Hi, everyone. Good evening, and thanks for joining. We have with us senior management of Kajaria Ceramics, including Mr. Ashok Kajaria, Chairman; Mr. Chetan Kajaria, Vice Chairman; Mr. Rishi Kajaria, Managing Director; Mr. Sanjeev Agarwal, Chief Financial Officer; and Mr. Parveen Gupta, DVP, Finance. I would request Ashokji to start with the initial remarks, post which we'll have a Q&A session. Over to you, Ashokji. Thank you so much.
Management
Thank you. Thank you, Ritesh. Good evening, everyone. It gives me great pleasure to welcome you to the quarter 2 F '26 earnings conference call of Kajaria Ceramics Limited. Joining me on this conference call is the senior management team of Kajaria Ceramics. In quarter 2 F '26, our consolidated revenue stood at INR1,186 crores, a marginal growth of 1% year-to-year compared to the corresponding period last year, mainly due to low growth in tiles volume and absence supply sales due to the closure of this division. During the last two quarters, market remained soft. Our sales growth was minimalistic, yet the company achieved a good operating margin and healthy cash flow, underscoring its operational strength and financial discipline. As you are aware, the company is currently undergoing cost optimization journey focused on cost optimization, capital prudence and a strategic sales reset. This transformation is intended to build a leaner, more agile and growth-ready organization that is bot
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