Kajaria Ceramics (KAJARIACER) Q2 FY27 Profit Jumps 42% as Pricing Power Offsets Gas Costs
India's tile leader posted a 24% revenue rise and a 170 bps margin expansion, fueled by price hikes and a narrowing gap with unorganized rivals.
Kajaria Ceramics reported a 42.3% surge in Q2 FY27 profit as strong pricing and a 10% volume increase drove revenue up 24%. Margins expanded despite higher gas costs, supported by a narrowing price gap with Morbi.
Kajaria Ceramics entered its second quarter with a renewed advantage: a narrower price gap with low-cost rivals from Morbi. This shift, driven by a sharper gas-price shock for those competitors, allowed the market leader to push through price increases while still attracting customers. The result was a quarter where profit growth significantly outpaced a strong top line, signaling regained pricing power.
Revenue for the September quarter rose 23.8% year-on-year to ₹1,468.26 crore. Net profit jumped 42.3% to ₹190.72 crore, lifting the net profit margin by 170 basis points to 13.0%. The sequential momentum continued, with both revenue and profit growing over 10% from the June quarter.
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ2 FY27 | PreviousQ1 FY27 | Same quarter LYQ2 FY26 |
|---|---|---|---|
| Revenue (₹ Cr) | 1,468.26YoY +24% | 1,328.08 | 1,186.01 |
| Profit (₹ Cr) | 190.72YoY +42% | 171.03 | 133.98 |
| Net Profit Margin (%) | 13.0YoY +15% | 12.9 | 11.3 |
The Pricing Power Resurgence
The core story was a significant price-led revenue increase. According to reports from Motilal Oswal and others, blended tile realizations rose about 11% year-on-year. This followed price hikes the company took to offset higher gas costs, which hit Morbi manufacturers even harder. The price gap between Kajaria and unorganized players has narrowed from around 40% to roughly 20%, making its branded products more competitive for a larger segment of buyers.
Volume growth of 10%, as reported by Investywise, complemented the pricing gains. This was a recovery from a gas-constrained first quarter, showing demand remained healthy. The company's newer segments also contributed strongly; insights from DSIJ indicate the sanitaryware and faucets business grew about 33% in the first quarter, on track for its full-year target of 35-40% growth.
Funding Growth from Within
Strong operational performance translated into robust cash generation. Operating cash flow for the first half of FY27 stood at ₹371.03 crore, according to Multibagg.ai. This internal accrual is funding a significant capacity expansion without needing debt. The company has planned a ₹400 crore capital expenditure for FY27 to add about 20 million square metres of glazed vitrified tile (GVT) capacity at its Gailpur and Srikalahasti plants.
Management expects a healthier volume recovery in the second half and has maintained its EBITDA margin guidance of 18-19% for the full year. The confidence stems from the structural shift in competitive dynamics and a focus on expanding in the project segment, where it has secured orders from large builders.
Key Points
- Consolidated net profit surged 42.3% year-on-year to ₹190.72 crore, with the net profit margin expanding 170 basis points to 13.0%.
- Revenue growth of 23.8% was driven by an approximate 11% increase in tile realizations and a 10% rise in sales volume.
- The price gap with unorganized Morbi players has narrowed significantly, improving Kajaria's competitive position and supporting volume growth.
- Strong first-half operating cash flow of ₹371.03 crore is funding a ₹400 crore capacity expansion aimed at adding 20 MSM of GVT capacity by mid-2027.
- Management has reiterated its full-year guidance, expecting over 20% tile revenue growth and an EBITDA margin between 18% and 19%.
Hexa Perspective
The quarter confirms a tactical window has opened for Kajaria. The external shock of gas prices has inadvertently done what years of branding could not: dramatically narrow the cost advantage of the unorganized sector. This allows for both price increases and market share gains, a potent combination visible in the 42% profit jump.
The sustainability of this advantage hinges on the persistence of that narrowed gap. If gas prices normalize sharply, the competitive pressure from Morbi could return. For now, the company is using the cash flow from this period to lock in structural gains through more efficient, in-house capacity. The bet is that by the time the new plants come online, the market will have permanently shifted towards branded, organized players.
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