Kajaria Ceramics Ltd Q1 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Rahul Agarwal - Ikigai Asset Manager - Analyst : Good evening, sir. Thank you for the opportunity. Sir, basically three questions. Something you want to share on the current trends of the tile market? You didn't touch upon that. I just wanted to know what is the outlook for this year, both on domestic as well as export markets for tiles? That is the first question.

Question: Rahul Agarwal - Ikigai Asset Manager - Analyst : Okay, sure. Secondly, on the cost side, when I look at your P&L for first quarter, it looks like gross margin expansion has actually flowed through to EBITDA. When I look at staff cost and other expenditure, they are flat YoY. All three line items on the cost side, I think there is a LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JULY 22, 2025 / 10:30AM, KAJR.NS - Q1 2026 Kajaria Ceramics Ltd Earnings Call fair bit of optimization. If you could elaborate a bit more how do you see the full year in terms of cost, what kind of margin would you expect, that will be helpful. And thirdly, I just wanted to know, based on now the Plywood division is now shut, Bathware, I think this quarter reflects only Bathware revenues on the other segment. So that business looks -- the EBIT is about INR4.5 crores. So some outlook on that, and what are the total savings would you expect from Plywood and Bathware being profitable for fiscal '26 as compared to '25? If you could just highlight that, that will be helpful. That's all. Thank you.

Question: Rahul Agarwal - Ikigai Asset Manager - Analyst : Got it, sir. Is it possible to quantify the Plywood loss for last year which will be saved this year? Just to know the change why --

Question: Rahul Agarwal - Ikigai Asset Manager - Analyst : Got it, sir. Thank you so much. I will get back in the queue.

Question: Shaleen Kumar - Ubs Inc - Analyst : Good evening, sir. Good evening, Mr. Kajaria. Congratulations on a very good set of operating profit and earnings. Sir, I just want to a little more understand what you talked about in terms of your strategy of optimizing your marketing. Did I understand clearly that you had earlier different marketing people for different products, and now, you are bringing them all together under one roof?

Question: Shaleen Kumar - Ubs Inc - Analyst : So earlier, there were three people going to the same distributor?

Question: Shaleen Kumar - Ubs Inc - Analyst : All right. And sir, what was the thought process behind unification of this, bringing them together?

Question: Shaleen Kumar - Ubs Inc - Analyst : Right. Sounds like good -- just one or two questions more to it. Any initial distributor feedback that you have got from when you are doing this? Can there be a concern that, because distributors may be dealing with multiple people, now he is dealing with one person, is one person adequate to offer all the products? What is the initial feedback you are getting?

Question: Shaleen Kumar - Ubs Inc - Analyst : Right. So effectively, what we believe that this amount of sales and marketing people are enough. Or there is still more scope you think we can bring it down?

Question: Shaleen Kumar - Ubs Inc - Analyst : Got it, sir. And sir, I think Mr. Kajaria, you made a comment about promoters have not taken salary. Is it possible to quantify it? And is it like this year? Or is there any thought process behind it? When would you like to take it or any idea on that?

Question: Shaleen Kumar - Ubs Inc - Analyst : That is a great move. So we are saying that we will not take salary till we reach INR250 crores EBITDA per quarter, and right now we are at INR187 crores.

Question: Shaleen Kumar - Ubs Inc - Analyst : Okay. That is a very good thing, sir. Pretty positive for the markets and for the minority shareholders. Sanjeev-ji, since I have you here, can I also ask you about what happened in other expenses? We could see that they have dropped significantly. Is it just -- because I think part of it may be the sales, but sales may be in staff cost. So what else is happening and how sustainable is it?

Question: Shaleen Kumar - Ubs Inc - Analyst : But even if I look at before that Q2, Q3, before that you were running at INR140 crores and now you are at INR113 crores. So even you can see 20% drop from Q2, Q3 is there. And obviously, Q4, I understand there was some one-off, but even that is, there is a big drop. So I just want to understand how sustainable --

Question: Shaleen Kumar - Ubs Inc - Analyst : Got it, sir. So fair to assume that this run rate is sustainable, INR115-odd crores for the other expense. Can we work with that?

Question: Shaleen Kumar - Ubs Inc - Analyst : All right, sir. So sir, is there a -- LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JULY 22, 2025 / 10:30AM, KAJR.NS - Q1 2026 Kajaria Ceramics Ltd Earnings Call

Question: Shaleen Kumar - Ubs Inc - Analyst : Done, sir. I will come back in the queue. Thank you, sir.

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : So sir, firstly, how is the fuel cost for North-South, the number which you used to give in all the calls? Can you give that?

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : Okay. And the same trend continues now, right?

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : Yeah. And what was the promoter's salary in FY25 for the full year, sir?

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : Okay, got it. And sir, lastly, this Nepal -- sir, last question, this Nepal is -- it's a JV. So normally, you combine Nepal volume in the total volume what you show in PPT?

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : Okay. And you had a plan to increase this 50% to 51%?

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : Okay, understood. So whether this will happen this year because once it becomes 51%, then possibly, we will plug in the entire volume.

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : Understood. Got it. And Nepal, what would be the sales utilization we can see from PPT, the production, but the sales and production are broadly in line or possibly sales could be way lower?

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : Okay. And what would be the Nepal sales volume for this quarter?

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : Okay, that is helpful. Thank you so much.

Question: Pujan Shah - Molecule Ventures LLP - Analyst : Thanks for the opportunity, sir. My first question would be a very naive question, but just wanted to understand [prelims] idea of the industry dynamics which is shaping up. So we have seen the last three, four few years have been very limited in terms of growth for the industry as well, and understanding that part while real estate cycle has been very stable. So what is the happening which is not able to grow the industry? Is it about the export has been a decrease which is being, right now, getting used in the domestic which is impacting the margins or the sales growth? Or what is happening in the industry so far?

Question: Pujan Shah - Molecule Ventures LLP - Analyst : Right, sir. But just want to understand we are doing everything what we can do in the terms of structuring internally. But just wanted to understand, on the industry side, what has happened in the last few years which have never been happened? Because ultimately, in India, the consumption story will be very strong. So what happened in the last few years?

Question: Pujan Shah - Molecule Ventures LLP - Analyst : Sir, ultimately I understand each of the industries has been suffering out. I understand the pain, I understand the vibes. But all of a sudden, in the last two years, I expect that in the coming quarter, there will be a demand shaping up very well. But in the previous two years, what such things have happened that the cycle has not been shaping up very well? So what are, I understand, really --

Question: Pujan Shah - Molecule Ventures LLP - Analyst : Sure, sir. That is all from my side. Thank you so much.

Question: Pranav Mehta - Equirus Securities Pvt Ltd - Analyst : Good afternoon, sir. Very heartening to see that the margins have improved solidly in this quarter. Sir, I wanted to understand on the Adhesives business. So how are we seeing things picking up in that segment? And how are we placed in terms of, let's say, the strategic growth that we are targeting in this segment along with what kind of margins we are targeting in this segment?

Question: Pranav Mehta - Equirus Securities Pvt Ltd - Analyst : Yes, Adhesives.

Question: Pranav Mehta - Equirus Securities Pvt Ltd - Analyst : Okay, sir. And sir, how are we looking at, let's say, increasing the portfolio in this segment in particular? So we will be focusing more on the, let's say, tile adhesives and related segment only? Or are we going ahead with some new chemistries as well?

Question: Pranav Mehta - Equirus Securities Pvt Ltd - Analyst : Sure, sir. Thank you. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JULY 22, 2025 / 10:30AM, KAJR.NS - Q1 2026 Kajaria Ceramics Ltd Earnings Call

Question: Girish Choudhary - Spark Capital Advisors (India) Pvt Ltd - Analyst : Hi. Congratulations to the entire team for the margin performance. My first question is, again, on the cost reduction measure. You spoke about the various initiatives, but if you can help us guide on how to quantify this going ahead, in the sense how much has been realized this quarter and how much more scope is left to be gained going ahead, that will be helpful. Basically, just to ascertain the sustainable EBITDA margins for the company post these measures.

Question: Girish Choudhary - Spark Capital Advisors (India) Pvt Ltd - Analyst : Okay. But assuming the prices or realization remain as it is, I mean, just to understand, how much of impact can it come on the EBITDA? I mean, like you said, this quarter not much has come, and we have seen a significant improvement in the margins.

Question: Girish Choudhary - Spark Capital Advisors (India) Pvt Ltd - Analyst : But the other thing is, can we assume the current quarter margins are the base case minimum going ahead from here on?

Question: Girish Choudhary - Spark Capital Advisors (India) Pvt Ltd - Analyst : Okay, got it. I mean, given these -- my other part of the question is that given the streamlining of resources and then integrating the divisions, have you seen any revenue impact because volumes have not gone anywhere, or I mean, it's not impacting the volumes or revenues?

Question: Girish Choudhary - Spark Capital Advisors (India) Pvt Ltd - Analyst : Okay. So you don't see any impact to volumes because of the integration?

Question: Girish Choudhary - Spark Capital Advisors (India) Pvt Ltd - Analyst : Got it. So my last question on the capital allocation, now that we have close to INR500-odd crores of cash, I mean, if you can just guide us on the CapEx for the year and dividend payout numbers as well.

Question: Girish Choudhary - Spark Capital Advisors (India) Pvt Ltd - Analyst : Okay. But any thoughts on any, let's say, inorganic acquisitions and all, I mean, just --

Question: Girish Choudhary - Spark Capital Advisors (India) Pvt Ltd - Analyst : Thank you, sir. All the best.

Question: Akash Shah - UTI Mutual Fund - Analyst : Hi, sir. Thank you for the opportunity. Sir, just wanted to ask regarding the management structure. So earlier, if I remember correctly, Chetan sir used to look at Ceramic Tiles division as well as Plywood. And Rishi sir used to look at Bathware and GVT, PVT. Now, we are trying to combine Ceramic, PVT, GVT, and I mean all the tiles division, and Plywood is shut now. So sir, how would the management team -- I mean, how would the promoter look at the business? I mean, who would be managing which division, if you can share?

Question: Akash Shah - UTI Mutual Fund - Analyst : Right, right. Sure, sir.

Question: Akash Shah - UTI Mutual Fund - Analyst : Right. Sure, sir. Thank you. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JULY 22, 2025 / 10:30AM, KAJR.NS - Q1 2026 Kajaria Ceramics Ltd Earnings Call

Question: Shaleen Kumar - Ubs Inc - Analyst : Yes, sir. Just one, two clarification. Volume impact, when you are talking about positive or there can be negative volume impact?

Question: Shaleen Kumar - Ubs Inc - Analyst : Got it. No, I just wanted to clarify because of the -- I think the previous participant question was impact. So just wanted to clarify on that which side of the impact we are talking about. And Sanjeev, why are we not committing towards the margin? If we think that if the price remains where they are, if the gas cost remains where they are, you are doing some cost initiative, you are looking at the positive benefit of the strategy, then why this cannot be a base margin? This should -- the margin should be better only from here.

Question: Shaleen Kumar - Ubs Inc - Analyst : Sure, sir. I understand. We just wanted to understand on the cost side -- I think that we are comfortable on the cost side. That's fine for my side. Okay. Thank you, sir.

Question: Ritesh Shah - Investec Bank PLC - Analyst : Yeah. Hi, sir. Thanks for the opportunity, sir. A couple of questions. First is, in the last quarter, you had indicated rebranding exercise. And I think you have hinted towards what we have announced this particular quarter. But sir, my question is, what is it that prompted us to do this? Like why is it that we are doing now? I think you did -- thanks, Sanjeev-ji, for pushing you on this. But what was the underlying reason why we are doing this particular exercise right now?

Question: Ritesh Shah - Investec Bank PLC - Analyst : Right. But sir, to whatever limited understanding I have of our strategy, I think we were always aware that there are certain SKUs in a particular store which will not be available and we will ask the buyer to go to the next store for that particular size, say from PVT to GVT. And historically, we have maintained that there is no negative volume impact because of that. So what is it that has changed? Is it the underlying volume growth was lower?

Question: Ritesh Shah - Investec Bank PLC - Analyst : Sure. Sir, this is helpful. My second question is, we had different stores, Star, Prima, Prima Plus, Eternity, Eternity World, Grest Universe, we have been adding the type of stores. So when it comes to the end distribution, how should we look at the consolidation over there? And if you can help us with the number of stores that we have and what is the roadmap on consolidation over here?

Question: Ritesh Shah - Investec Bank PLC - Analyst : Right. Sir, sorry to dig a little bit more. I think the underlying strategy for us, what was earlier, is we have more shelf space. It helps us display more, and that effectively helped us sell more. Now, when we are consolidating the end distribution network, we are seeing in the same store, we will have Ceramic, GVT, PVT, which essentially means that the number of SKUs on display will be lower. It's something counterintuitive to what we had always indicated. So how should one understand on the asset turn at the store level? And second is the inventory and working capital.

Question: Ritesh Shah - Investec Bank PLC - Analyst : Okay. And sir, last question. Kajaria, you said -- you had indicated in the last call that we had our focus on government orders. That number will actually increase from 4% to around 10% in FY26. And we had special teams in North which were doing Lysening. Sir, where do we stand over there? Is this part of the business moving as desired? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JULY 22, 2025 / 10:30AM, KAJR.NS - Q1 2026 Kajaria Ceramics Ltd Earnings Call

Question: Ritesh Shah - Investec Bank PLC - Analyst : Okay. And sir, just last one question I would like to squeeze, we had come up with a Keronite brand which I presume was economy tiles probably better than Morbi, but we were giving a value proposition which was there. Sir, where do we stand on our strategy over here?

Question: Ritesh Shah - Investec Bank PLC - Analyst : Correct. Possible, can I squeeze one more question? Or I'll join back the queue.

Question: Ritesh Shah - Investec Bank PLC - Analyst : Okay, thank you. Sir, just to understand, what do we make of Infra.Market as a marketplace? Like we understand, they are now the second largest player in the country getting into JVs, multiple JVs, and Morbi. How do you rate the competitive intensity because of this? Is it good, bad, and how does it change things for us?

Question: Ritesh Shah - Investec Bank PLC - Analyst : Sure, sir. This is quite useful. Thank you so much. All the very best. Thank you.

Question: Amit Purohit - Elara Securities (India) Pvt Ltd - Analyst : Thank you for the opportunity. Sir, just on -- if you could highlight some of the regional trends in the demand that you have seen, and also, second on the gross margin. There has been sequential improvement. I understand Q1, if I am not wrong, mix-wise, is a better quarter than the rest of the quarter. Is that the case one should think about it? Or is there something which is changing, helping you to maintain this kind of gross margin?

Question: Amit Purohit - Elara Securities (India) Pvt Ltd - Analyst : Sir, gross margin, if I look at it, this quarter has been pretty strong; sequentially it has improved, although YoY broadly similar or slight improvement. So I just wanted to understand, is this that the mix is favorable during this quarter and going forward?

Question: Amit Purohit - Elara Securities (India) Pvt Ltd - Analyst : Okay. And I mean, if I just do a rough calculation of assuming a high single-digit growth trends, a 16.5%, 17% margin probably will help us to achieve that.

Question: Amit Purohit - Elara Securities (India) Pvt Ltd - Analyst : Thanks, sir.

Question: Rahul Agarwal - Ikigai Asset Manager - Analyst : Yeah. Thank you so much for the follow-up question. Sir, any initiatives also happening on the Bathware side, if you could -- you want to talk about that? How do you look at Bathware profitability going forward? It's going to be a INR500 crores business. And I understand Bathware profitability could be better margin than Tiles. So that could easily be like a 15% EBITDA business. Any thoughts on this division, please?

Question: Rahul Agarwal - Ikigai Asset Manager - Analyst : Yeah, that's what I wanted to check. I mean, what could be levers there for Bathware? It could also be like a INR75 crores, INR80 crores EBITDA number there. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JULY 22, 2025 / 10:30AM, KAJR.NS - Q1 2026 Kajaria Ceramics Ltd Earnings Call

Question: Rahul Agarwal - Ikigai Asset Manager - Analyst : Okay. Got it. Thank you so much. And all the best for the rest of the year.

Question: Sneha Talreja - Nuvama Institutional Equities - Analyst : Good evening, sir, and thanks a lot for the opportunity. I've been hearing a lot on Morbi or basically even the listed players taking price increases. Is that really happening on ground, price hikes? And what are the reasons for price hike at this point of time?

Question: Sneha Talreja - Nuvama Institutional Equities - Analyst : Understood. The second question was, with other Morbi-based leading players expanding capacities geographically, how do we see our market share at that point of time? Does the competitive intensity increase from those players?

Question: Sneha Talreja - Nuvama Institutional Equities - Analyst : Understood, sir. Thanks for the opportunity.

Question: Praveen Sahay - Prabhudas Lilladher Pvt Ltd - Analyst : Yeah, sorry. I am Praveen Sahay from PL. So my question is related to the realization. Because if I look at the -- on the last several quarters, overall realization is on the correction. And in the same time, if you can give a color, with the correction in the realization, your gross margin has improved significantly for this quarter, 160 basis points on the YoY side. So how it's -- that's RM cost has significantly decreased.

Question: Praveen Sahay - Prabhudas Lilladher Pvt Ltd - Analyst : Related to realization, sir. Realization. So where do you see this realization?

Question: Praveen Sahay - Prabhudas Lilladher Pvt Ltd - Analyst : Okay, thank you.