Summary
Kajaria Ceramics Limited - Q3 FY 2026 Earnings Call Summary Friday, January 30, 2026 4:00 PM
Event Participants
Executives 6 Ashok Kajaria (Chairman), Chetan Kajaria (Vice Chairman), Rishi Kajaria (Managing Director), Sanjeev Agarwal (CFO), Kartik Kajaria (Head, Adhesives), Parveen Gupta (VP, Finance)
Analysts 9 Bharat (Individual Investor), Bhavesh (DV Investment Advisors), Dharmesh Shah (JM Financial), Keshav Bijayratan Lahoti (HDFC Securities), Nilesh Sharma (Anantnath Skycon), Omkar Ghugardare (Shree Investment), Praveen Sahay (PL Capital), Rahul Agarwal (IKIGAI Asset Management), Sneha Talreja (Nuvama Capital), Sonali (Jefferies)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Consolidated Revenue | ₹1,168 crores | Flat YoY; impacted by zero growth in tile volumes and closure of Ply division. |
| Tiles Revenue | ₹1,030 crores | -1% YoY from ₹1,040 crores; affected by dealer destocking and vertical unification. |
| Bathware Revenue | ₹103 crores | +9% YoY from ₹95 crores; growth seen in faucets and sanitaryware. |
| Adhesives Revenue | ₹35 crores | +75% YoY from ₹20 crores; strong growth in the emerging segment. |
| EBITDA Margin | 17.20% | +442 bps YoY but -74 bps QoQ; sequential drop due to lower sales realization. |
| PBT (before JVs/Excep.) | ₹165 crores | +49% YoY from ₹111 crores; driven by higher operational efficiencies. |
| PAT | ₹88 crores | +13% YoY; impacted by a ₹39.64 crore exceptional item related to a subsidiary fraud. |
| Working Capital Days | 64 days | +8 days from 56 days in Sep '25; due to increased receivables and lower current liabilities. |
| Ad Spend | ₹24 crores | Lower YoY due to ₹5 crore savings from not holding an annual dealer meet in Thailand. |
Geographic & Segment Commentary
- Tiles Segment: Performance remained flat as the company underwent “Kajaria 2.0” transformation, involving the unification of three sales verticals (Ceramic, GVT, PVT). Management noted a transition period where dealers are re-adjusting displays to carry multiple product lines.
- Bathware & Adhesives: Bathware saw steady 9% growth with an 8-12% price hike in faucets effective Jan 19, 2026, due to rising brass costs. Adhesives grew significantly by 75%, albeit on a lower base.
- Manufacturing and Exports: Indian tile exports are projected to fall to ₹16,000 crores in FY26 (from ₹20,000 crores) due to Red Sea crisis freight rates. Kajaria converted a 9.1 MSM ceramic line to GVT in Gailpur to meet value-added demand.
Company-Specific & Strategic Commentary
- Kajaria 2.0 & Unification: The company consolidated separate vertical sales teams into a unified structure to enable cross-selling across 70-75% of the dealer network as of Q3.
- SKU Rationalization: Management purposefully liquidated old inventory and reduced common SKUs across verticals to improve plant efficiency, leading to a temporary 240-250 bps drop in realization.
- Digital and Institutional Focus: Increasing thrust on “white spaces” through a dedicated team for architects, interior designers, and government projects to move beyond retail-heavy dependency.
- Governance: Appointed EY for a forensic audit following a subsidiary fraud; implemented stricter financial controls where even the Chairman/CFO cannot sign for amounts as low as ₹10,000.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| EBITDA Margin | 17% - 18% | Management intends to maintain this range and reinvest excess margins into advertising. |
| Volume Growth | Positive / Encouraging | January 2026 data shows positive shoots; recovery expected from Q4 FY26 onwards. |
| Capex | Minimal / No major plans | No major capacity expansion planned for the next 1-2 years; focus on utilizing existing 82.5 MSM. |
| Bathware Growth | Double-digit volume | Expected growth following price hikes and increased dealer penetration. |
Risks & Constraints
| Risk | Context |
|---|---|
| Realization Pressure | Average realizations dropped by ~9% over 18 months to ₹365/sqm; management is fighting this via value-added GVT products. |
| Export Slowdown | A 20% value drop in national exports (Morbi) could lead to oversupply in the domestic market, though management notes many Morbi plants prefer shutting down over domestic dumping. |
| Input Costs | Brass prices have spiked, necessitating ~10% price hikes in faucets; gas prices remain stable but carry a minor ₹1 increase outlook for Q4. |
Q&A Highlights
Unification & Dealer Churn
- Question: How is the unification affecting volumes and are dealers comfortable? (Keshav Lahoti, Rahul Agarwal)
- Answer: Market was weak and we did dealer-level destocking. About 75% of churning is done; 100% will be complete this quarter. Pricing and schemes were aligned globally on Jan 1st to simplify the process for the ground team. (Rishi Kajaria, Chetan Kajaria)
Margins & Discounting
- Question: Why did margins drop sequentially despite cost-cutting? (Sneha Talreja)
- Answer: We took a 240-250 bps hit on realization to liquidate older SKUs and common inventory across vertical plants. Cost optimization journey is ongoing and will continue through next year. (Sanjeev Agarwal)
Capital Allocation & JVs
- Question: Capacity has dropped from 92.5 to 82.5 MSM while competitors expand. Why? (Utkarsh Nopany)
- Answer: We don’t feel the need for major capex yet. We have 82.5 MSM and easy access to Morbi outsourcing if needed. We are also converting JVs into wholly-owned subsidiaries (acquired 10% more in one this quarter) for tax efficiency and management control. (Chetan Kajaria, Sanjeev Agarwal)
Fraud Update
- Question: What is the status of the forensic audit? (Sneha Talreja)
- Answer: EY is appointed. Prima facie, the fraud amount is within previous estimates. We have completely revamped signing authorities and processes to prevent recurrence. (Sanjeev Agarwal)
Key Takeaway
Kajaria Ceramics reported a transitional Q3 FY2026 with flat revenues of ₹1,168 crores, as the company prioritized its “Kajaria 2.0” structural unification over immediate volume growth. The quarter was characterized by deliberate dealer destocking and SKU rationalization, which caused a sequential realization dip but maintained healthy EBITDA margins of 17.2%. Strategically, the company is shifting from a vertical-siloed model to a unified cross-selling approach, targeting 100% integration by the end of FY26. While tiles remained sluggish, the Bathware and Adhesive segments showed resilience with 9% and 75% growth respectively. Management has signaled a cautious but “encouraging” start to January 2026, pivoting away from major capital expenditure toward balance sheet optimization and digital transformation. The company remains focused on regaining domestic market share through institutional approvals and value-added GVT products as it enters FY2027 with a leaner inventory and a unified distribution channel.
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