Tiles, Bathware - Demand Trends Healthy; Margin Headwinds In Near Term To Persist For Tiles: ICICI Securities

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ICICI Securities Report

The tile and bathware companies under our coverage reported better-than-expected revenue/Ebitda performance in Q1 FY23 aided by continued strong demand from tier-II, tier-III and below cities.

Revenue growth for tile companies – Kajaria Ceramics Ltd. and Somany Ceramics Ltd. – was in the range of 64.3-76.5% (three-year compound annual growth rate of 11.9-12.1%) with volume growth of 42.4-52.9% (three-year CAGR of 5.9-6.3%) on a tepid base.

Bathware (i.e. sanitaryware and faucetware) revenues grew 91.4% YoY (three-year CAGR of 18.2%) for Cera Sanitaryware Ltd. whereas it surged 93% YoY (three-year CAGR of 20.1%) for Kajaria Ceramics, and 87.1% YoY (three-year CAGR of 13.2%) for Somany Ceramics on a tepid base.

Ebitda margin for tile companies were maintained QoQ despite higher fuel cost whereas for Cera Sanitaryware it declined 342 bps QoQ (up 633 bps YoY).

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