Kajaria Ceramics Ltd Q2 2026 Earnings Call Transcript

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

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : Hello. Hi, sir. Congratulations on strong set of margin, multi-quarter high margin. I want to understand on cost, you you did you're doing cost rationalization. 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 the 26, 27? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2025 / 11:00AM, KAJR.NS - Q2 2026 Kajaria Ceramics Ltd Earnings Call Unidentified Company Representative 1 So in terms of cost Russia we have taken significant steps, for example, reengineering of the packing boxes across all our plants across the country which is in substantial saving of 3,035 rows on an annual basis. That we've also worked on reducing a purchase price and outsourcing of tiles of ceramic and polish virified removed a lot of people around 250 people, so a lot of work has gone behind the scenes to, rationalize the cost which you've seen in the results.

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : Got it. So what would be the margin of the company once all these savings are done and by when this will be done? Unidentified Company Representative 2 See, we can't pay about the margin, but as we said in the previous communications that we have started the cost of optimization journey and some portion we have covered in the 1st and second quarter and every quarter the journey will remain like in the next 2-3 quarters there will be more savings. But we cannot quantify the margin.

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : Got it. Understood. Thank you. I'll come back to you.

Question: Shaleen Kumar - Ubs Inc - Analyst : Good evening of the Arishi, Kitan and in you, just checking, am I audible because I'm in a, on the road, so just in. Case I'm audible sir. Clear me. Line clear me, this is the line is not clear, so can the volume. Okay. Is it. Sorry. Like. Okay, sure. So, just, to begin with, can some initial feedback from, let's say distributors, it's been a few months of this, unification, any feedback that we, you can share, how's the feedback from the distributor or the influencers, customer side, any, both on the positive or negative side if we can share something or any challenges that we've been facing or positive side, that would be great. Unidentified Company Representative 3 So we'll start individually from the distributor point of view, they're very happy. So what used to happen was 3 people used to go to a single dealer. And, now we reduced that to 1, and if it's a very big dealer, maybe 2, but, overall they 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 1,818 20 people who are, on board, and we're going to further send the team. Their job is only to go and meet influencers, architects, interior designers, and talk about Kajaa, Kravet, bond, whatever products you're offering. So Also I think another change what we've done is we have kept a consultant now, a management consultant who is guiding us how to increase the market share of our company. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2025 / 11:00AM, KAJR.NS - Q2 2026 Kajaria Ceramics Ltd Earnings Call I just give you a very small example that, in our deal when a lot of dealers were there were not performing so that, so when we access that data in a very open mind we got a lot of information that where what we were some dealers need to close some white spaces are there where the dealers have to be made. So the consultant is going to structure the entire thing for us, how we can penetrate further into, the market and increase our market share.

Question: Shaleen Kumar - Ubs Inc - Analyst : Okay, got it, sir. See, we understand on not just on the, growth side, we understand that this time we had a heavy rains in Tokyo, but, do you see any changes coming back in October, any uptake, green shoots in terms of the growth, for in October or too early to sleep? Unidentified Company Representative 3 It's too early to say because it's the Diwali time also but we are pretty hopeful this quarter, October to December we should have some volume growth. The exact number would not like to say, but we should definitely have some volume growth this quarter. And.

Question: Sneha Talreja - Nuvama Institutional Equities - Analyst : And 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 our fuel cost too is down this particular quarter. What would be the reason here for savings? Is it an industry-led phenomenon? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2025 / 11:00AM, KAJR.NS - Q2 2026 Kajaria Ceramics Ltd Earnings Call Unidentified Company Representative 2 Power and fuel and fuel is low, but.

Question: Sneha Talreja - Nuvama Institutional Equities - Analyst : Sir. In 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. Unidentified Company Representative 1 So we have workers on continuously. We can't for the exact savings as as of now, but they're constantly working on the raw materials also however wherever we can, save cost that at the factory level. Unidentified Company Representative 3 But a lot of the work has already been done also and you can see the num that is a positive numbers also. So a lot of impact is started. Unidentified Company Representative 2 Like even in this month we did some, good saving in certain materials so this will be reflected in Q3 and Q4.

Question: Sneha Talreja - Nuvama Institutional Equities - Analyst : Understood. You actually you, while you mentioned that you know you formed the team for architects, you also have formed a team for catering to projects, you were. Unidentified Company Representative 3 See, projects, the big business we were always tapping the big projects were always, we were looking at this is a new segment which was, not there with Kajaria where meeting architects and interior designers, and with that we also have some, people who they also want to tap the government projects.

Question: Sneha Talreja - Nuvama Institutional Equities - Analyst : Bye. All the best team. Thank you.

Question: Sajal Gupta - FE Securities - Analyst : Yes, good afternoon. I have a good evening, Shuti. Congratulations for such a small performance, and it's performance to the show. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2025 / 11:00AM, KAJR.NS - Q2 2026 Kajaria Ceramics Ltd Earnings Call I think from the information which I'm getting from the dealers at the ground level that you mean business and overall in the business which has resulted in a lot of.

Question: Sajal Gupta - FE Securities - Analyst : No, I'm saying at the ground level what I've checked with the dealers, that there's a lot of, reinventing of the businesses is happening and overalling of the business operations which has resulted in a lot of cost saving. 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 for by you, and I must congratulate both Chetan and Riiv for coming on board and doing such an excellent job. So my question out here is, with this such a strong performance, the obviously the other people have also asked this question. Growth is missing. When do you start seeing the growth and what levels of growth can actually come. And my second question to you would be, during the, COVID time, if I'm not wrong, the company had reported a 20% better margin. How far are we from achieving a 20% better margin from here?

Question: Sajal Gupta - FE Securities - Analyst : That is remarkable is that margins are sustainable and you're talking of a higher margin from the 14 15% margin originally which the company used to run is commendable and that to and with the volume growth, I'm sure the company is going to do very well. So, I think you have answered most of my questions. Thank you so much and wish you all the good luck for the future. Thank you.

Question: Sagar Jatta - Marine Research - Analyst : Hello? Hi morning. Yeah.

Question: Sagar Jatta - Marine Research - Analyst : Good evening. Thanks for the opportunity. Government projects at last year at 10% volume. So this year I just wondered how do we see the numbers going forward the year. Unidentified Company Representative 1 So as we. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2025 / 11:00AM, KAJR.NS - Q2 2026 Kajaria Ceramics Ltd Earnings Call Said, our prepaid group project mixes 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 plan projects where private builders will keep on, changing within that mix, but as you said, they are more focused and aggressive on getting more project volumes also as we keep on going forward.

Question: Sagar Jatta - Marine Research - Analyst : Okay. And sir, other expenses said advertisement ex expenses first quarter and increasing quarter on quarter and full year spending of advertisement. Unidentified Company Representative 2 But actually the advertising expenses have come down if you see the. It has come down in this half quarter and a half year as compared to the previous one, but in the next few quarters, it will, it will go up.

Question: Raman Venkata Kerti - Sequent Invest - Analyst : Hello, sir. Hello, sir. Thank you for allowing me to ask the question. I have two questions. So, one is as everybody was asking Martin, so you said you, there were some initiatives which they do, one of them was re-engineering the packaging across all your factories which get 235, colors of annual savings. So, but when I look at This quarter, on quarter on quarter, sequential quarter basis, there has been 30 ks of, additionally bitter. And when we compare it on YOI basis, there is no excess of 70, around kgs70 of additional despite the revenue being flattish. So I just want to understand in brief how I will REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2025 / 11:00AM, KAJR.NS - Q2 2026 Kajaria Ceramics Ltd Earnings Call be able to optimize the cost at the same time, what's the companies, restructuring, policy with respect to the employee cost because I, I've seen that during this quarter, the employee cost has come down a lot. Unidentified Company Representative 2 It has not come down a lot, but as you move around, it will not go up, then we could be slightly saving in the employees that we have not given inrement in this year, and some people may be relieved may go. And we are not intending to hire any fresh people, so that with the growth of sale, the percentage of employee cost of sale will go down one and what was the other question I.

Question: Raman Venkata Kerti - Sequent Invest - Analyst : Yeah, so, and my second question is with respect to volume. Sir, can we expect the volumes, what are you expecting the volume in H2, and, going forward, are we expecting volumes to come back? Unidentified Company Representative 3 So as I said earlier, we cannot give you the exact number, what we're expecting an H2, but yes. We'll definitely see some volume growth from here on in H2 we definitely did so H1 was we had zero volume growth. H2 will definitely have some good volume growth. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2025 / 11:00AM, KAJR.NS - Q2 2026 Kajaria Ceramics Ltd Earnings Call Unidentified Company Representative 2 See, in that why we didn't get the volume in the first two quarters. There are two reasons. One, the market was soft. The another we were busy in the unification and when you do, when you change the process. Which was there in the company prevalent for so many number of years. So there is some adjustment happened as said, by the Chairman in his speech if you are noted. So we some days we must have lost because of the change in the system. We have changed the change in the team. The reporting is, I mean, there is a change in reporting some dealers, some destocking, some restocking, so some blames may go to. Towards that also, so we believe the market is improving and as we move towards the unification 3 as the benefit of hiring a consultant will also give some fruit. So combination of all three factors will definitely lead to some volume growth.

Question: Sajal Kapoor - Antifragile Thinking - Analyst : Yeah, thanks, Ashoi, it's, uncommon to see the promoter directors voluntarily foregoing salaries in a fiscal year, and that's obviously commitment. And the question is, how does the management now ensure that the best in class and capability employees are, quote unquote 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.

Question: Sajal Kapoor - Antifragile Thinking - Analyst : Is for sureshogi. My question is how do we convince good employees that they have a bright future ahead?

Question: Sajal Kapoor - Antifragile Thinking - Analyst : No, absolutely, I think that's that's reassuring, and I think with a leaner and fitter organization all we need is a demand recovery which none of us can predict or control but at the moment it comes the earnings should be speaking for themselves. Thank you so much that's that's all I had. Unidentified Company Representative 2 Thank you.

Question: Onkar Ghugardare - Shree Investments - Analyst : 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 phenomena you have done? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2025 / 11:00AM, KAJR.NS - Q2 2026 Kajaria Ceramics Ltd Earnings Call Unidentified Company Representative 2 So it's not one off. It is a dividend we have paid as for 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 4 years.

Question: Onkar Ghugardare - Shree Investments - Analyst : Okay, and you have mentioned that the demand is soft, in the first two quarters. Actually, if you see for the last 34 years, there, I mean, we say maybe 4, 5%, 6, 7% some years, 7, 8%, 8, 10%. But it hasn't been much. So, I mean, what has been the major contribution to demand not being there for the last 34 years, when the sales of real estate companies are growing. I mean, there is a lag effect, but how much lag effect? Unidentified Company Representative 2 There was a slowness in the demand in 34 years and we didn't grow the way we have been growing, prior to that, but this time it is not because of the unification, because of the correction of our system. We will not be see in the prior to this this 45 years we have been growing in double good double-digits. So we have been taking market share and then even in the era where we have grown 45%, we have taken the market share because industry had not grown at that percentage even in those years. So as we said in our to the reply to the earlier question, three things will happen. One, the market may improve. Which will help 2 we will continue to take market share because of the change in our marketing policies, the unification majorly as we are thinking freshly, we are hiring the consultant. We are revisiting our the there in our dealer dealer system, everything we are revisiting, so that will also help in getting good volume.

Question: Onkar Ghugardare - Shree Investments - Analyst : So how soon you are expecting the demand to come back? I. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2025 / 11:00AM, KAJR.NS - Q2 2026 Kajaria Ceramics Ltd Earnings Call Okay with the. With all the efforts you are putting in, you, you're saying that it should be visible from this port.

Question: Onkar Ghugardare - Shree Investments - Analyst : Okay. Thank you.

Question: Pulkit Patni - Goldman Sachs Group Inc - Analyst : Sir, thank you for taking my question and 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're all grappling with is what is actually happening to demand, sir, like in your view, your experience of doing this business for more than 23 decades. Why is it that for the last 3 years demand is so sedate? 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're doing are quite permanent in terms of cost cutting, so just help us educate a little bit more on. What do you think is happening to demand, of ties in India?

Question: Pulkit Patni - Goldman Sachs Group Inc - Analyst : So, maybe I didn't put my question across correctly. No, I by no means meant, that, others are growing and you are not growing. I'm just trying to understand why in the last three years styles of an industry which is also building materials not showing the kind of demand like, what do your dealers tell you what's happening on the ground, sir? I want to just improve my understanding rather than questioning what the company is doing because I. 100% appreciate that you are doing the right thing in the interest of the company. It's just why tile demand has been so weak if you can throw a little bit more color on that particular aspect.

Question: Pulkit Patni - Goldman Sachs Group Inc - Analyst : Sure sir, we are all hoping for the same. Thank you.

Question: Ritesh Shah - Investec Bank PLC - Analyst : Yeah, a couple of questions. First, yes, 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 we look at it because we have the brand, we have the distribution what incrementally what next. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2025 / 11:00AM, KAJR.NS - Q2 2026 Kajaria Ceramics Ltd Earnings Call Unidentified Company Representative 1 So a couple of things first, like the mapping the country state by state, seeing whether the dealers are not as the Chairman said because the dealers are not performing where they are not there present where the competitors are we're doing a deep analysis state by the country and identifying those areas where we can penetrate deeper and send in a distribution network. That's also focusing where we can make more exclusive showrooms as we go along. Currently we have 450 exclusive showrooms of 1,850 dealers. Our target is to increase that more in the next couple of years and get more exclusive distribution, showrooms. So those are the efforts going on behind the scenes. Also, thirdly, with the unification now happening, we're looking at making a policies uniform in terms of pricing also the discount structure so it can simplified for the dealer to understand all the vert of the company when a guy goes to visit him and sell the product. So all these actions are happening behind the scenes as they go along. Unidentified Company Representative 3 And also in terms of product, a lot of new products are launched. Also earlier some dealers were not keeping those products, but now that cross selling has happened, so now all dealers have access to the entire range. Of Kajaria. Sure, this.

Question: Ritesh Shah - Investec Bank PLC - Analyst : Sure, this is helpful. . Just a quick, question on, the export side. I showed you, I think last quarter you had given a number of around 16,500 to 525, and for F 526 we were looking at around 18,000 tos of exports at industry level. So, how should we look at this if the exports don't know, is it something which worries us? Should we, how should we think about it? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2025 / 11:00AM, KAJR.NS - Q2 2026 Kajaria Ceramics Ltd Earnings Call Unidentified Company Representative 3 So for the data which you got the last 6 months export has grown a little bit. So from last 6 months they had April 24 to September 24th they had a volume of about 7,600 crows. April 25th to September we have exported about 8,300 curs so there's a marginal 10% increase, 9 to 10% increase, and this will continue looking at the.

Question: Ritesh Shah - Investec Bank PLC - Analyst : Okay. Fine. I just gone back with you. Thank you so much for the answers.

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : Right, thank you for the opportunities. So, how much was the spend as a percentage of senior absolute number for the H1 and what is the target for this year? Unidentified Company Representative 2 Actually, sir. We spend. Roughly what was the question? I.

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : Okay, so as you highlighted, the spend is lower. So possibly the target is to lower it or possibly maybe because of that we. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2025 / 11:00AM, KAJR.NS - Q2 2026 Kajaria Ceramics Ltd Earnings Call Unidentified Company Representative 2 We intend to increase it in the set up. We intend to increase it, in the second half, and the lower the reason for the lower add in the first half was also that we did not, do this dealer one which we used to do in Thailand. Unidentified Company Representative 3 Okay. So the option for 6 months and then now next 6 months we will, push the advertisement further.

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : Got it. The target is to continue with 3%, 3% of sale as the ads going forward. Unidentified Company Representative 2 It's not percentages, see, it's not, we were never, spent in the percentage terms. See, we are the largest spender of ad in the whole industry. So it's absolute number, even we do the same number, it's. Very fine and number 2, we are, as we are doing cost optimization in that area, we are doing the same in the advertisement so optically the number may be less as far as the financials are concerned, but we are taking more value from the from the lower numbers. So we have negotiated with our advertisement, vendors as well, and we have got good saving in that.

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : In each one, your tis revenue growth is flat. So can you possible to bifurcate project and retail? Both are both has been flat or something is doing better. Unidentified Company Representative 1 Maintained in the same level approximately.

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : Okay. How is the margin looking right now? Unidentified Company Representative 2 The margin is okay, but see, we have made some profit in Nepal, but. I said in the last call also because we have some inventory in the system which is beyond the norm so we will not be very happy with that profit number. Our intent will be to liquidate the inventory, even the margin or the profit is less, and it's a very small venture, just a 5 million venture and out of it 50% is the partner 50% is over. So just, margin will not, and this will not be any of impact on the overall thing. And otherwise also we are it's a JVB it's not part of EBITDA. It's just below the lines.

Question: Keshav Lahoti - HDFC Securities Ltd - Analyst : Yeah sure sir, point you can so my first question was on the same side only, but it's so right now it's so strategy. I agree with you. Yes, sir. That's it from my side. Thank you.

Question: Onkar Ghugardare - Shree Investments - Analyst : So how. Much this unification, because of this unification, how much volumes she would have lost and also by closing down one of the business, approximately how much you would have lost? Sorry. Unidentified Company Representative 3 So because of unification, we will not be to quantify that what volume we have lost. What we are saying is that our main focus was more on tending the organization. And for that. Unidentified Company Representative 2 In the we could have we could have lost some sale we I cannot deny that, but it's not possible to quantify that because the sales people dealer are I mean they're just having a new thing to them. So all everything is new, so they are adjustment. Unidentified Company Representative 3 Very insignificant figure. We have not lost all our sales as such. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2025 / 11:00AM, KAJR.NS - Q2 2026 Kajaria Ceramics Ltd Earnings Call Unidentified Company Representative 2 Yeah Hello.

Question: Ritesh Shah - Investec Bank PLC - Analyst : You all for joining on to the conference call. The team, thank you so much, for calling us opportunity to host you. Thank you so much, sir.