Kajaria Q2 FY26 Profit Surges 58% on Cost Gains

Kajaria Ceramics Limited, India’s leading tile manufacturer and one of the largest ceramic producers globally, released its Q2 FY26 financial results on 16th October 2025, showcasing a strong performance on the profitability front.

While revenue growth remained modest at 2.08% year-on-year (YoY), profitability surged sharply — with net profit up 57.78% YoY — driven by improved margins, cost efficiency, and a favorable product mix. The company’s consolidated profit after tax (PAT) stood at ₹132.96 crore, while revenue reached ₹1,186.01 crore for the quarter.

Kajaria’s strong bottom-line performance signals a solid operational turnaround after a challenging FY25 marked by input cost inflation and sluggish demand in the real estate sector. Let’s dive deeper into the company’s financials, operational highlights, market performance, and analysts’ expectations post-results.

Kajaria Ceramics Q2 FY26: Financial Summary

Kajaria Ceramics delivered a resilient performance in Q2 FY26, with a significant rise in profits despite moderate revenue growth. The company’s operating efficiency, raw material cost optimization, and premium product demand drove margin expansion.

Extracts of FY25 & FY26 Results

YoY Growth Comparison

The data highlights a remarkable improvement in profitability despite modest revenue growth, showing Kajaria’s ability to manage costs and sustain margins even in a slow-demand environment.

Q2 FY26 Highlights: Strong Profitability Amid Flat Volume Growth

Kajaria Ceramics’ Q2 results present a story of strategic efficiency and operational discipline. Despite flat volumes in tiles due to a sluggish housing cycle, the company reported healthy profit growth owing to:

• Better realizations from premium product segments

• Reduced gas and power costs

• Improved plant utilization

• Cost optimization across logistics and raw materials

Key Operational Highlights

• Revenue Growth: Consolidated revenue rose 2.08% YoY to ₹1,186.01 crore, driven by better pricing in premium tiles and bathware.

• Profit Surge: Consolidated PAT grew by 57.78% YoY to ₹132.96 crore, reflecting improved EBITDA margins and reduced fuel costs.

• Standalone Performance: Standalone PAT increased 29.95% YoY, signaling operational resilience in core domestic markets.

• EBITDA Margins: Estimated to have improved due to lower input costs and higher utilization rates across manufacturing units.

Kajaria’s strategy of focusing on value-added tiles, premium bathware, and expansion of its adhesives and plywood segments continues to enhance profitability despite moderate revenue growth.

About Kajaria Ceramics Limited

Kajaria Ceramics Limited, founded in 1988, is India’s largest manufacturer of ceramic and vitrified tiles and ranks 8th globally in terms of production capacity. The company operates multiple manufacturing facilities across India with a combined capacity exceeding 86 million square meters per annum.

Product Portfolio

Kajaria Ceramics offers a diverse range of products, including:

• Ceramic Wall and Floor Tiles

• Vitrified Tiles (Polished, Glazed, and Double-Charge)

• Sanitaryware and Bathware (Kajaria Bathware)

• Plywood and Adhesives (Kajaria Ply and Kajaria Adhesives)

With a vast distribution network of over 1,800 dealers and 8,000+ sub-dealers, the company maintains a strong presence in both urban and rural India. Its international footprint spans over 35 countries, further contributing to its leadership position in the ceramics industry.

Kajaria Ceramics Share Price Performance

Kajaria’s stock reflected muted trading sentiment despite robust quarterly results, indicating that the market had partially priced in the company’s improved profitability.

• Opening Price (17 Oct 2025): ₹1,258.20 per share

• Current Trading Price: ₹1,243.00 per share

• Monthly Return: +0.83%

• 6-Month Return: +53.01%

• 1-Year Return: -10.59%

The stock has witnessed significant recovery over the past six months, driven by improved sector demand, lower input costs, and optimism in the housing and real estate market. However, the 1-year return remains negative due to the prior year’s commodity cost pressures and valuation corrections.

Drivers Behind Kajaria’s Strong Q2 FY26 Performance

1. Input Cost Rationalization

Energy costs, especially natural gas and LNG — key inputs for tile manufacturing — declined in FY26 compared to FY25, significantly improving Kajaria’s gross margins. Fuel constitutes a major cost for ceramics manufacturers, and lower prices directly enhance profitability.

2. Premium Product Mix

Kajaria’s strategy to push premium and high-margin tiles, bathware, and sanitaryware segments has helped increase profitability even as overall volumes remained flat. The growing share of large-size vitrified tiles and designer products boosted realization per square meter.

3. Operational Efficiency

Continuous focus on operational excellence, process automation, and logistics optimization helped Kajaria control overheads and improve capacity utilization across plants in Gujarat, Rajasthan, and Andhra Pradesh.

4. Distribution and Retail Strength

The company has continued expanding its retail presence through Kajaria Galaxy showrooms, enhancing visibility and brand penetration across India’s Tier-II and Tier-III cities.

5. Diversification

Kajaria’s diversification into bathware, adhesives, and plywood has begun contributing meaningfully to its revenues. These newer segments, though smaller in scale, carry better margins and align with the company’s vision to become a holistic home-improvement brand.

Industry Outlook: Tiles & Ceramics Sector

The Indian ceramics and tile industry has seen a steady recovery in FY26, driven by the following factors:

1. Real Estate Revival: Improved housing demand, particularly in urban and semi-urban markets, has increased tile consumption.

2. Government Infrastructure Push: Programs like Pradhan Mantri Awas Yojana and smart city initiatives continue to boost construction activity.

3. Export Growth: India remains a global hub for ceramic exports, benefiting from China+1 sourcing trends.

4. Sustainability Shift: Consumers increasingly prefer energy-efficient, eco-friendly tiles, driving innovation in manufacturing technology.

Kajaria Ceramics, with its scale, brand strength, and innovation focus, remains well-positioned to capitalize on these sectoral tailwinds.

Analyst and Market Outlook Post-Q2 FY26

Analyst Estimates

Following Kajaria’s Q2 FY26 results, most brokerage houses have maintained a positive outlook, citing margin improvement and steady volume recovery in the second half of FY26.

According to consensus estimates:

• Upside Price Target: ₹1,380.60 per share (12-month forward)

• Downside Scenario: ₹1,220.60 per share

• Implied Potential Upside: ~11% from current levels

Analyst Commentary

“Kajaria’s Q2 numbers reaffirm its ability to deliver margin expansion even in a soft demand environment. The company’s focus on premiumization, cost control, and non-tile segments will likely drive sustainable earnings growth.”
— Market Analyst, ICICI Securities

Brokerages believe that while near-term revenue growth may remain moderate, margin resilience and demand recovery in FY27 could drive re-rating in the stock.

Comparison: Kajaria Ceramics vs Peers

Kajaria continues to outperform peers in profitability and efficiency, backed by its scale, brand equity, and premium positioning.

Strategic Outlook and Growth Plans

1. Capacity Expansion

Kajaria is investing in expanding manufacturing capacities to meet rising demand. The company aims to add over 10 million sq. meters per annum in the next two years through greenfield and brownfield projects.

2. Sustainability Focus

The company continues to adopt energy-efficient kilns, renewable energy sources, and water recycling systems across plants to reduce its carbon footprint — an emerging priority in the ceramics sector.

3. Product Innovation

With R&D centers dedicated to new designs and finishes, Kajaria is emphasizing luxury segment tiles and smart bathware solutions to strengthen its market leadership.

4. Retail Expansion

The company is expanding its Kajaria Galaxy retail chain and exclusive brand outlets in smaller cities, aiming for deeper market penetration and higher dealer loyalty.

Challenges Ahead

Despite the robust Q2 performance, a few risks remain:

1. Raw Material Volatility: Any rise in natural gas or fuel prices could pressure margins.

2. Competitive Intensity: Increased competition from unorganized players and imports could impact pricing power.

3. Real Estate Demand Cycles: Tile demand is closely tied to real estate and construction trends.

4. Export Market Fluctuations: Global economic slowdowns can affect international sales.

However, Kajaria’s diversified product range and focus on operational discipline help mitigate many of these risks.

Investor Takeaways

For investors, Kajaria Ceramics presents a balanced risk-reward opportunity:

• Positives: Strong profitability growth, brand leadership, cost control, expanding product portfolio.

• Negatives: Limited short-term volume growth, cyclical industry exposure.

Given the company’s long-standing leadership in the ceramics industry, investors with a medium to long-term horizon can consider accumulating the stock, especially on market dips. The ongoing housing and infrastructure recovery should support steady demand growth in FY26–FY27.

Conclusion

Kajaria Ceramics’ Q2 FY26 results underscore the company’s resilient business model, strong operational efficiency, and ability to generate profits even amid moderate sales growth. With a 57.78% YoY increase in profit and consistent cost control, the company has demonstrated its capacity to navigate cyclical pressures effectively.

As India’s housing, renovation, and real estate markets continue to expand, Kajaria remains poised to benefit from higher tile consumption and rising demand for premium home solutions.

For investors seeking stability, market leadership, and gradual capital appreciation, Kajaria Ceramics continues to be a strong contender in the home improvement and building materials segment.

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