Thread by @ValueEducator

#KajariaCeramics Q3 2022 Highlights 🏘

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Achieved highest Qtrly turnover of 1068 Cr

Tiles market picking up well due to higher construction in various geographies

Higher Gas Cost are hitting the business & Industry has not grown due to it.

Plywood Segment :

Revenue from plywood segment increased from 13 cr to 25 cr
FY 21 Revenue - 39 Cr
FY 22 Expectation from plywood segment : 70-75 cr
FY 24 - 180 to 190 Cr

Power & Fuel Cost affected the EBITDA Margins. Currently EBITDA Margins are at 17.21% vs 21.68% (Q321) vs 18.54% (Q2 22)

Working capital days increased from 56D to 58D

Exports got impacted due to container prices

Current Capacity Utilization : 95% to 100%

Expansions (all brownfiled)
1. Jaxx at Morbi : March 2022
2. Srikalahasti : April 2022
3. Gailpur : April 2022
4. Also adding 5 million sq. meter slab manufacturing in gujarat with 210 cr, which is expected to come by march 2023.

Currently kajaria was outsourcing but now Putting up the high end machinery. Revenue from this capex would be around 400 cr. As this capex is greenfield so costs are high but to add additional capacity of 5 million sq. meter capacity as brownfield expansion cost will be 150 cr.

Additional Expansions in bathing segment
1. Gilpur - 6 lakh pieces with 5 cr capex (Brownfield) - Revenue potential 50-60 cr
2. Gujarat - 7 Lakh pieces with 80 cr capex (Greenfield) - Revenue potential of 160 cr

Gas Prices and Price Hikes :

Gas Prices Trends :
1. 23rd aug - 36 Rs
2. 24th aug - 40 Rs
3. 4th Oct - 50 Rs
4. 1st Nov - 62 Rs
Cumulative gas costs at Rs 46.5 (Q3 22) vs 36.5 (Q2 22) and it's a tough time but they have taken the price hikes of about 9 to 10% cumulative till now

Till now not able to pass on the prices fully. It will be seen in Jan, Feb. In Q3 22 there was about 5% price hike. Kajaria able to absorb 600 to 650 bps due to price hikes.

Guidance :
1. 15% volume growth CAGR for next 3 years
2. adding 12 million sq. meter capacity (brownfield)

3. Next year adding 5 million meter slab manufacturing
4. Next year revenue growth will be 20-22% due to price increase.
5. Every year capex : 250 cr to 300 cr for next 2-3 years

Last year sanitary ware revenue : 200 cr vs this year 45-50% growth expected.

Margins will increase as value added products will increase in sanitary ware segment. Margins in value added products in sanitary ware are higher compared to tiles. But first it should reach to critical mass then operating leverage will start.

Not setting up the plant in north India because raw materials are not available. Morbi is well located region which can supply to entire country.

Freight Cost Increase :

1. America : It used to be $4,000-$5,000 (20 feet container) now it's $15,000

2. Dubai : It used to be $200 now it's $1200

Work from home :

Investment bankers, auditors, financial sector employees are still working from home. Demand for larger size homes in increasing and they are also refurbishing their homes which was not done

earlier due to which demand for tiles also increasing.

Dealer Details :

Currently total dealers: 1700
Exclusive kajaria showrooms: 380
In last 9 months added 50 new showrooms

Advertising cost
This year advertising budget is 75 cr out of which 49 cr is spent in first 9 months.

Kajaria will be increasing the advertising budget next year.

Geography wise demand :

New construction happening in : Lakhnau, Pune, Chandigarh (Tier 1, Tier 2, Tier 3, Middle Cities). Very Robust Demand

Renovation Market : Metro cities (Delhi, Mumbai, Kolkata)

Tile manufacturing industry situation is not great right now due to gas price increase. Industry will getting the benefits as gas prices will get stabilized as they won't be passing the benefits immediately.

Kajaria wanted to have latest machinery so they are not going to acquire old plant due to old machineries.

Kajaria will be starting a showroom in dubai with local player to expand into gulf regions.