India's Kajaria Ceramics posts higher Q3 profit as demand outweighs cost

Kajaria Ceramics

31/01/2024 09:53

BENGALURU, Jan 31 (Reuters) - Indian tile manufacturer
Kajaria Ceramics  KAJR.NS  reported a 40.2% jump in
third-quarter profit on Wednesday, driven by robust demand which
overshadowed a slight jump in expenses.
    In the previous fiscal year, Kajaria grappled with soaring
gas prices and weak demand.
    However, the firm experienced a surge in demand this year,
particularly from the housing and construction sectors, buoyed
by the Indian government's intensified focus on infrastructure
development ahead of the general election.
    This push has been beneficial for Kajaria, which according
to Jefferies, leads India's ceramic/vitrified tiles market with
approximately a fifth of the market share.
    The company reported a consolidated net profit of 1.04
billion rupees ($12.5 million) in the quarter ended Dec. 31,
compared to 743.2 million rupees a year ago.
        The company in a statement said it is seeing a positive
rub-off effect on tile demand in fiscal 2025, as the real estate
sector enters an upturn.
    Kajaria's revenue from operations rose 5.6% to 11.52 billion
rupees, with sales up 6.4% to 27.09 million square meters.
    While the company's expenses rose 1.8%, power and fuel
expenditures, which form a fourth of total expenses, fell by
almost 14%.
    Asian spot LNG prices have declined in 2023 from record high
levels witnessed in 2022, but they are still relatively high.
    Lower natural gas prices are advantageous for ceramic
product manufacturers like Kajaria, as they rely on fuel to
power their tile kilns.
    Separately, Kajaria approved investments of up to 500
million rupees and 300 million rupees in Keronite Tiles and
Kajaria Ultima to make them a subsidiary and wholly-owned
subsidiary, respectively.
    The company's shares were trading up 2.2% as of 3:12 p.m.
IST after the results.
($1 = 82.9910 Indian rupees)

 (Reporting by Ashish Chandra in Bengaluru; Editing by Varun H
K)
 ((ashish.chandra@thomsonreuters.com; +91 7982114624;))