01 — At a Glance
The Ceramic Tile Empire That’s Fixing Itself (Badly)
- 52-Week High / Low₹1,322 / ₹745
- Q3 FY26 Revenue₹1,168 Cr
- Q3 FY26 PAT₹88 Cr
- Q3 FY26 EPS₹5.51
- Annualised EPS (Q3×4)₹22.04
- Book Value₹184
- Price to Book5.14x
- Dividend Yield0.94%
- Debt / Equity0.10x
- FY26 TTM PAT₹432 Cr
The Setup: Kajaria Ceramics, India’s largest tiles manufacturer, closed Q3 FY26 with ₹1,168 crore revenue (flat YoY), but EBITDA margins soared 442 basis points to 17.2% thanks to cost cuts and unbelievably, the death of their money-bleeding plywood division. The stock has surrendered 22.5% over six months. Meanwhile, they’re restructuring the entire dealer network, got caught with ₹20 crore fraud at the bathware subsidiary, and management keeps assuring us this is “the year of correction.” It’s not clear if they mean they’re correcting the business or correcting our expectations.
02 — Introduction
A Ceramic Company Pretending to Do A Turnaround (On Accident)
Kajaria Ceramics is India’s largest ceramic tiles manufacturer and eighth largest in the world. They make things you stick on your bathroom walls, kitchen floors, and aspirational real estate listings. Not sexy. Not tech-enabled. Not a “platform play.” Just tiles. Boring, essential, profitable tiles.
For three decades, this company has quietly built a 1,800+ dealer network, spread across two brands (Kajaria for tiles, Kerovit for sanitaryware), and maintained a 51% market share in automotive lubricants—wait, no, that’s a different company. They maintain a 51% market share in ceramic and vitrified tiles. Even worse (for competitors).
But late 2024 through Q3 FY26, everything went sideways in the most interesting way. BP-to-Stonepeak happened somewhere else (wrong article). Here, instead, Kajaria had to kill their loss-making plywood business, uncover ₹20 crore in embezzlement at the bathware subsidiary, restructure their entire dealer base, and watch revenue growth flatline while their management kept telling investors they’re doing it all on purpose. It’s a year of “correction,” they claim. Whether that means fixing the company or correcting analyst expectations remains unclear.
February 2026 Concall Digest: “Revenue flat… but that’s because we were destocking inventory and changing dealer displays. Margin up 442 basis points because we cut costs and killed plywood. Everything’s under control. Trust us.” — The tone was professionally optimistic. The numbers were weirdly honest. Make of that what you will.
03 — Business Model: How Do Tiles Work? (Seriously, How?)
They Stick Stuff On Walls. Repeat For 30 Years.
Kajaria makes ceramic wall tiles, vitrified floor tiles, polished glazed variants, and sanitaryware (faucets, bathtubs, etc.) under the Kajaria and Kerovit brands. In FY25, tiles accounted for ~88% of revenues; the rest came from bathware (8%), adhesives (1%), and the now-defunct plywood business.
Revenue split: own manufacturing (56% of sales), subsidiaries (19%), and outsourcing (25%). This outsourcing flexibility is critical—Morbi (Gujarat) is India’s tile manufacturing hub, and when demand slows, Kajaria can source from contract manufacturers cheaper than running their own plants at 80% utilization.
They own six manufacturing plants with 86–90 MSM (million square meters) capacity annually. They moved 114.69 MSM of tiles in FY25 vs. 108.14 MSM in FY24 — volume growth. But pricing pressure from both weaker exports and buyer consolidation in real estate meant flat nominal revenue growth. The fundamental unit economics of tiles remain strong, but the market cycle matters enormously.
Market Share~51%Ceramic Tiles
Dealer Network2,649As of Mar’25
OPM (Q3 FY26)17.2%Up 442 bps YoY
Avg Capacity Util.~85–90%FY25–Q1 FY26
The Mix Upgrade Story: At Gailpur, they converted a 9.1 MSM ceramic floor tile unit to GVT (glazed vitrified tiles) to capture higher realizations. This is the quiet play everyone should watch — value-added product shift, not volume chase. Management explicitly tied this to “improving realization” and margin leverage. This is how mature tile makers stay relevant.
💬 If your mechanic can recommend oil that’s traded at 60% ROCE, why can’t your architect recommend tiles with the same philosophy? What’s stopping organized tile penetration in India?
04 — Financials Overview
Q3 FY26: Where Growth Died (Temporarily)
Result type: Quarterly Results | Q3 FY26 EPS: ₹5.51 | Annualised EPS (Q3×4): ₹22.04 | 9M FY26 EPS: ₹19.27
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 1,168 | 1,156 | 1,186 | +1.04% | -1.52% |
| EBITDA | 200 | 148 | 213 | +35.1% | -6.1% |
| EBITDA Margin % | 17.2% | 12.8% | 17.9% | +442 bps | -74 bps |
| PAT | 88 | 78 | 133 | +13.2% | -33.8% |
| EPS (₹) | 5.51 | 4.88 | 8.35 | +12.9% | -34.0% |
The Real Story: Revenue is flat. But look at EBITDA margin — up 442 bps YoY to 17.2%. Management guided to a 17–18% margin band going forward. The sequential decline (from 17.9% to 17.2%) was due to deliberate inventory liquidation and SKU rationalization — they slashed prices to clear slow-moving stock and unify their product range. This was a conscious trade: take a margin hit in Q3 to emerge “cleaner” in Q4. Management admitted: “this was the issue of this quarter only. Lot of our work is done.” The exceptional fraud provision of ₹39.64 crore hit Q3 PAT heavily, masking underlying operational strength.
05 — Valuation Discussion
What Is This Company Actually Worth?
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