ICICI Securities has reiterated a BUY recommendation on Kajaria Ceramics, setting a target price of Rs 1,300, implying about 17% upside from the current market price of Rs 1,114 over a 12-month horizon. The brokerage’s thesis rests on a sturdy Q4FY26 showing, improving demand conditions, and a benign balance sheet that leaves Kajaria well placed to capitalize on a more orderly tile market. Revenue rose 12.4% year on year to Rs 1,373.4 crore, while EBITDA jumped 90.4% to Rs 264 crore as margins expanded sharply to 19.2%. The message from the report is clear: near-term performance has improved meaningfully, but the real test will be whether Kajaria can preserve that momentum as costs, competition, and demand normalize.

Quarterly performance turned robust

Kajaria’s Q4FY26 numbers were impressive on almost every meaningful operating metric. Tile volumes climbed 11% year on year to 33.5 million square meters, and tile revenue rose 11.4% to Rs 1,212.6 crore. Operating discipline played a decisive role, with lower material, employee, and other expenses helping EBITDA margin surge by 786 basis points versus last year. Profit after tax came in at Rs 155.8 crore, up 266.3% year on year, even after accounting for an impairment loss in its subsidiary, Kajaria International DMCC.

The company also delivered a healthier working-capital profile, with days falling to 51 from 65 a year earlier. That matters because a tighter operating cycle can free up cash and improve resilience during periods of price pressure or uneven demand. For a tile maker, the combination of volume growth and margin expansion is often the cleanest signal of underlying strength, and Kajaria delivered both in the quarter.

Demand and pricing backdrop

The brokerage believes the industry environment is becoming more favorable for organized players. It points to inventory clearing in the unorganized Morbi cluster and elevated gas and freight costs as factors likely to curb supply from smaller competitors. That shift could reduce competitive intensity and give branded companies more room to defend pricing and market share. In parallel, Kajaria has already raised prices by 12% to 17% in the North and by 16% to 17% in the West and South to offset higher gas costs.

Management noted that demand was up 8% to 9% through February and got an additional lift from the March shutdown in Morbi. Production was down 7% in Q4FY26, but all plants returned to full capacity on April 16, which should support a recovery in output. The company is also leaning on its brand strength and deeper reach into tier 2 and tier 3 markets, where premium and organized offerings are gradually gaining ground.

Margin outlook remains central

Margins are the linchpin of the investment case. Kajaria’s management expects EBITDA margins to remain in the 18% to 19% band, and ICICI Securities sees a more normalized 17.1% in FY27 and 17.0% in FY28 as volumes rise and selling expenses inch higher. That is still healthy by industry standards, especially for a company with a net cash balance sheet and a strong brand franchise. The latest quarter showed that cost optimization can move the numbers quickly when demand is supportive.

Gas prices, however, remain a watchpoint. While the report highlights that the North plants use biofuel for about 30% of gas consumption, the sharp rise in headline gas prices across regions could still pressure operating economics. The good news is that Kajaria appears willing to defend profitability through measured pricing actions rather than chase volume at any cost.

Expansion and portfolio moves

Kajaria is continuing to sharpen its portfolio and manufacturing footprint. The company has bought the remaining 15% stake in its bathware arm, Kerovit, for Rs 50 crore, making it a wholly owned subsidiary. It is also expanding its Srikalahasti facility with a Rs 210 crore investment, which will add 10 MSM of GVT capacity by Q4FY27. These steps indicate a company that is still investing for scale, but without straining its balance sheet.

That balance sheet remains one of the report’s biggest comforts. Kajaria ended FY26 with Rs 755 crore in cash against Rs 130 crore of debt, leaving it with net cash and enough financial flexibility to pursue growth without taking aggressive leverage risk. For investors, that reduces the likelihood of unpleasant surprises if the market turns volatile.

Targets, valuations, and risks

ICICI Securities values the stock at Rs 1,300, based on 34 times FY28 earnings, and maintains its BUY call. The brokerage has also nudged up its estimates, now expecting revenue of Rs 5,438 crore in FY27 and Rs 5,757 crore in FY28, alongside PAT of Rs 583 crore and Rs 610 crore, respectively. Under its model, EPS is projected at Rs 36.6 in FY27 and Rs 38.3 in FY28. The report suggests that earnings growth should improve as volume recovery and price discipline work through the system.

Key risks include a sustained slowdown in demand and any sharp rise in gas prices. Those risks matter because Kajaria’s current operating momentum is partly supported by favorable supply-side conditions and management-led pricing actions. Still, with a strong brand, improving profitability, and a clean balance sheet, the stock remains positioned as a high-quality play on a gradual revival in India’s organized tile market.

Investor levels

For investors tracking the stock, the immediate reference level is the current price of Rs 1,114, with the research house target at Rs 1,300. That leaves roughly 17% upside if the brokerage’s assumptions play out over the next 12 months. On the downside, the report’s tone suggests that sustained demand weakness or another sharp input-cost spike would be the main triggers for caution rather than any balance-sheet stress.