Penetration into the retail market by expanding the distribution network, presence in the high-end vitrified tile segment and capacity expansion that increased the company's market share drove the stock of Kajaria Ceramics 99 per cent up in the last one year.
After a sluggish growth in 2009, the tiles industry saw a revival in 2010. Over last two years demand has grown at an average of 13 per cent led largely by the growth in high-end vitrified tiles. Being among the few organised players to be present in the polished and glazed vitrified tiles, Kajaria Ceramics made a strong growth.
The company forayed into manufacturing of vitrified tiles in 2010. Since then it has added a total capacity of 11 million square metres in vitrified tiles. With the acquisition of controlling stake in Jaxx Vitrified recently, the company's vitrified tiles capacity has increased by another 3.1 million square metres a year.
In the nine months ended December 31 of FY12, the company has recorded a sales growth of 39 per cent. Profits, however, have grown at a relatively slower pace following pressure from input costs and depreciating rupee. The company's recent move to increase end-product prices and entry into high-end sanitaryware can be expected to give it some breather. Also, the addition to capacity in vitrified tiles will reduce its import dependence to some extent and improve profit margins.
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