Motilal Oswal Financial Services has reiterated a BUY rating on Kajaria Ceramics with a target price of Rs 1,252, implying upside potential of about 19 percent from the current market price of Rs 1,049. The call comes despite the recent disclosure of a fraud at a step-down subsidiary, with management estimating a one-time financial hit of around Rs 200 million and expecting roughly half of that to be recovered from the implicated vendor. The house argues that the incident, while reputationally uncomfortable, does not impair the core earnings trajectory, where it projects compound annual growth in tile volumes, revenue, EBITDA, and profit after tax through FY28, alongside robust return ratios and strong free-cash-flow generation. Under the “Kajaria 2.0” efficiency program, the company is targeting annual savings of about Rs 1.5 billion, primarily in raw materials, manpower, travel, and salary costs, which should help defend margins even in a soft demand environment and amid intense competition from Morbi-based and other organized players. Motilal Oswal sees sustaining EBITDA margins above 18 percent as challenging but still expects a structurally healthy profile, with RoE of about 18 percent, RoCE of roughly 25 percent, and RoIC above 36 percent over FY26–28, reinforcing its positive stance on the stock for medium- to long-term investors.
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Investment Thesis and Rating

Clear BUY stance with meaningful upside
Motilal Oswal maintains a BUY recommendation on Kajaria Ceramics with a target price of Rs 1,252, valuing the stock at 30 times September 2027 expected earnings per share. At a current price of Rs 1,049, this implies upside of about 19 percent over the next 12 months, placing the stock firmly in the broker’s “BUY” band of expected returns above 15 percent.
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Growth, returns, and cash flows underpinning confidence
The brokerage expects Kajaria to deliver compound annual growth of about 9 percent in tile volumes, 10 percent in revenue, 20 percent in EBITDA, and 34 percent in adjusted profit after tax between FY25 and FY28, markedly stronger than the FY19–25 trajectory. Over the same period, the company is projected to generate more than Rs 5 billion of free cash flow annually, while sustaining a capital-efficient profile with RoE near 18 percent, RoCE around 25 percent, and RoIC close to 36 percent.
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Fraud Incident and Governance Response

Isolated fraud at step-down subsidiary
Kajaria has disclosed a financial fraud perpetrated by Mr. Dilip Maliwal, chief financial officer of Kerovit Global, a wholly owned subsidiary of Kajaria Bathware and a step-down subsidiary of the listed entity. The siphoning of funds is linked to purchase orders placed with a vendor related to Mr. Maliwal within a Rs 1.2 billion capital expenditure program at Kerovit Global.
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Financial impact and recovery prospects
Management estimates exceptional expenses of roughly Rs 200 million to be recognized in the profit and loss account, following auditors’ instructions. The company expects to recover around 50 percent of this loss from the vendor, and it has terminated Mr. Maliwal’s employment while filing a police complaint to pursue legal recourse.
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Systemic checks and governance messaging
The fraud surfaced during the roll-out of a more robust vendor onboarding process at both the parent and subsidiary levels, underscoring management’s attempt to tighten controls rather than a breakdown discovered by external forces. Kajaria reports that all other subsidiaries have been thoroughly reviewed and that no further discrepancies have been identified, reinforcing its public commitment to building a system- and process-driven organization.
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Kajaria 2.0: Efficiency and Margin Strategy

Ambitious cost-savings blueprint
Under the “Kajaria 2.0” program, management is targeting annual savings of around Rs 1.5 billion, with the biggest component—about Rs 900 million—expected from smarter raw material procurement. Additional savings of roughly Rs 250 million from manpower optimization, Rs 150 million from travel, and Rs 150 million from salaries are envisaged, with management indicating further scope for incremental efficiencies over time.
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Margin defense in a tough demand backdrop
The brokerage notes that maintaining EBITDA margins above 18 percent will be a “tall task” given muted demand and intense competition from organized brands and Morbi-based manufacturers. Even so, the cost program, along with operational leverage from gradual volume recovery, is expected to keep EBITDA margins in the mid- to high-teens, with forecasts of 17.6–17.8 percent over FY26–28.
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Financial Profile, Valuations, and Key Levels

Earnings and balance sheet strength
For FY26–28, Motilal Oswal projects sales rising from Rs 49 billion to Rs 61 billion, EBITDA from Rs 8.6 billion to Rs 10.8 billion, and adjusted PAT from Rs 5.4 billion to Rs 7.1 billion, with earnings per share climbing from Rs 33.6 to Rs 44.6. The company is expected to remain net cash, with strong free cash flow generation and improving book value per share from Rs 194 in FY26E to Rs 247 in FY28E, supporting a healthy dividend payout ratio in the mid-30s.
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Valuation metrics and trading band
On consensus estimates, Kajaria trades at about 31.2 times FY26 earnings, 27.4 times FY27, and 23.5 times FY28, with corresponding EV/EBITDA multiples of 18.6, 16.3, and 14.1 respectively. Historical analysis shows the stock oscillating in a wide one-year forward price-to-earnings band, and the current valuation sits at a premium to the market but in line with its own structural return profile in the building products space.
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Key price and valuation markers for investors
The report cites a 52-week range for the stock between Rs 745 and Rs 1,322, with the current market price at Rs 1,049 and the target at Rs 1,252. A sustained recovery in tile volumes and the ability to hold EBITDA margins at or above 18 percent are flagged as the crucial near-term triggers for any re-rating beyond the stated target.
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Suggested levels and stance for investors
From a portfolio-construction perspective, investors with a 12–24 month horizon may consider accumulating the stock on dips toward the Rs 900–950 band, where risk–reward appears more favorable relative to the earnings and return trajectory laid out by the brokerage. Partial profit-booking can be evaluated as the stock approaches the Rs 1,200–1,250 zone, while a decisive breakout and consolidation above the target region, accompanied by evidence of volume recovery and 18 percent-plus EBITDA margins, could justify a fresh re-rating case.
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Risks and Monitoring Framework

Macro, input-cost, and competitive threats
Motilal Oswal highlights three principal risks: a slowdown in the broader economy and construction activity, elevated volatility in gas prices (critical for tile manufacturing), and intensifying competition from Morbi-based units and larger organized peers. Any adverse combination of these factors could compress margins and delay the realization of the projected growth and return profile.
​What investors should track closely
The brokerage explicitly identifies recovery in tile volumes and the sustainability of EBITDA margins at or above 18 percent as the key near-term monitorables for Kajaria. In addition, the execution of the Kajaria 2.0 cost-savings program, the resolution and recovery around the Kerovit Global fraud, and continued discipline in capital allocation will likely determine whether the stock can hold or expand its valuation premium over time.