Kajaria Ceramics -Structural change to drive returns BUY:: Emkay

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Kajaria Ceramics

Structural change to drive returns

BUY

CMP: Rs 89                                       Target Price: Rs 117

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In a recent two day road show with Kajaria Ceramics, Mr Ashok Kajaria – Chairman & MD and Mr. Sanjeev Agarwal – CFO, shared future growth plans for the company and their outlook on the industry. As on one side, the management is confident about industry growth at ~15%, it’s change in product mix with rising share of high end (vitrified tiles) products is driving its profit margins and return ratios. Buoyant industry demand is likely to keep trading opportunities intact for the company and woo its revenues. With earnings growth (FY11-13E) at 26% and RoE stabilising at 28-29%, we expect that stock is set to get re-rated in near term and reiterate our BUY recommendation.