Kajaria Ceramics gains for third straight day ahead of Q2 results

In the past three days, Somany Ceramics (up 19 per cent) Kajaria Ceramics (9 per cent) have outperformed the S&P BSE Sensex, which up 2.4 per cent during this period

Shares of Somany Ceramics and Kajaria Ceramics were trading higher for the third straight day on Tuesday, rising up to 9 per cent in intra-day trade on the BSE on expectation of strong operational performance in the July-September quarter (Q2FY21).

Somany Ceramics rallied 9 per cent to Rs 230.55, while Kajaria Ceramics was up 2 per cent to Rs 575 in intra-day trade today. In the past three days, Somany Ceramics (up 19 per cent) Kajaria Ceramics (9 per cent) have outperformed the S&P BSE Sensex, which was up 2.4 per cent during the period.

The board of directors of Kajaria Ceramics is scheduled to meet today to, consider and approve the unaudited financial results of the company for the quarter ended September 30, 2020.

The nationwide lockdown and supply chain restrictions impacted the April-June quarter (Q1FY21) performance of tiles manufacturers.

“The Government’s efforts to infuse liquidity into an otherwise parched business world, has helped in improving sentiments. Having said that, we remain hopeful that demand would resurface as we near the festive season,” Kajaria Ceramics said in 2019-20 annual report.

ICICI Securities expect Kajaria's sales volumes to recover sharply after the easing of lockdown and largely from tier II, III towns. "We expect sales volume to de-grow 15 per cent year on year (YoY) to 16.7 MSM in Q2FY21E, much better than 61 per cent decline seen in Q1," the brokerage said.

On the revenue front, the brokerage firm expects Kajaria to de-grow 15 per cent YoY to Rs 605.8 crore mainly impacted by volume decline. "Given the gas price decline and cost cuts taken by the company, we expect EBITDA margins to expand 120 bps quarter on quarter to 15.9 per cent," it said.