Kajaria Ceramics Q4 FY26: Margin rebound, buyback plans, and a bigger South India capacity bet

Kajaria Ceramics ended Q4 FY26 with a sharp improvement in profitability even as production was disrupted by a temporary shutdown at Morbi in March. Consolidated revenue for the quarter rose 12% year on year to INR 1,373.35 crore, while EBITDA margin expanded to 19.19% from 10.01% a year ago. Consolidated profit after tax for Q4 FY26 rose to INR 155.75 crore versus INR 42.53 crore in Q4 FY25.

Management attributed the margin recovery to cost optimisation, better sales realisation versus the previous quarter, and operational efficiencies across production, sales and supply chain. The quarter also marked the payoff from a sales “unification” effort that management said required the first nine months of inventory and manpower realignment across channels, but began showing volume momentum from January 2026.

Q4 operating trends: sales outpaced production

Tile sales volume growth was 11% year on year in Q4 FY26. Total tile sales were 33.51 million square meters versus 30.11 million in Q4 FY25. In contrast, consolidated production in Q4 FY26 fell 7% year on year to 20.34 million square meters, largely because Morbi plants were shut in March and restarted from 16 April.

This divergence between production and sales reflected inventory drawdown. Management noted that inventory reduced meaningfully in March, improving cash flows. Working capital cycle improved to 51 days at March 2026 from 65 days at December 2025, which management attributed to lower inventory and receivables.

Revenue mix: tiles still dominant, adhesives gaining share

The quarterly revenue split shows tiles remains the earnings engine, but allied categories are becoming more visible.

In Q4 FY26, own manufactured tiles contributed INR 635.79 crore, tiles from subsidiaries contributed INR 247.38 crore, and outsourced tile revenue was INR 329.42 crore. Bathware (sanitaryware and faucets) contributed INR 116.57 crore, while adhesives delivered INR 44.19 crore, up sharply from INR 22.97 crore in Q4 FY25.

On a full-year basis, consolidated revenue rose 3% to INR 4,832.50 crore. FY26 revenue was led by own manufactured tiles at INR 2,322.89 crore, outsourced tiles at INR 1,055.20 crore, and subsidiaries tiles at INR 902.20 crore. Bathware delivered INR 413.64 crore and adhesives INR 136.43 crore.

A separate point to note is the treatment of plywood. Kajaria Plywood operations were disclosed as discontinued, and the presentation noted the company included it for ease of comparison.

Subsidiary performance and operational footprint

Kajaria’s multi-location footprint is central to its positioning, particularly in a year when Morbi faced energy and operating disruptions. The company reported consolidated tile capacity of 87.80 million square meters spread across India and Nepal. Key subsidiaries and their Q4 FY26 utilisation levels included Kajaria Vitrified (Morbi) at 99%, Kajaria Infinity (Morbi) at 97%, South Asian Ceramics (Telangana) at 83%, and Kajaria Surfaces (Morbi) at 81%.

In bathware, Kajaria Bathware operates multiple facilities: Kajaria Sanitaryware (Morbi) ran at 70% utilisation, Kerovit Global (Morbi) at 59%, and the faucet facility at Gailpur ran at 89% utilisation.

The company also updated on overseas initiatives. Kajaria International DMCC was set up for international expansion through joint ventures in UAE and the UK, but management stated the UK operation was closed due to high showroom running costs and difficulty generating profits in the short to medium term.

Corporate actions: buyback, bathware consolidation, and funding support for Kerovit Global

The Board meeting outcomes added important context to capital allocation and group structure.

First, Kajaria approved a buyback proposal (subject to shareholder approval) for up to 21.50 lakh equity shares, representing 1.35% of paid-up equity capital (standalone basis), at INR 1,380 per share, with an aggregate amount up to INR 296.70 crore. Management described the buyback as a way to return cash to shareholders, improve ROE, and signal confidence. The promoter and promoter group indicated they do not intend to participate.

Second, the company approved acquisition of 44,11,764 compulsorily convertible preference shares of Kajaria Bathware Private Limited from Aravali Investment Holdings, Mauritius for INR 50 crore. The disclosure notes Aravali had invested INR 64.50 crore in 2018, and the shareholder agreement required an exit via listing or buyout.

Third, the company approved subscription of 4.5 crore non-convertible redeemable preference shares of Kerovit Global Private Limited, up to INR 45 crore, to improve the debt-equity ratio of the entity.

Capacity expansion: doubling down on South India

The most material growth initiative disclosed is the Srikalahasti expansion in Andhra Pradesh. The Board approved an incremental 10 million square meters capacity addition for glazed vitrified tiles at an estimated investment of INR 210 crore, to be funded through internal accruals. The company stated the existing Srikalahasti glazed vitrified tiles capacity of 8.80 MSM is running at full utilisation, and the expansion is expected to be completed by March 2027.

Alongside tiles, the adhesives business is also scaling. The company disclosed that it has acquired 75% of Kajaria Adhesive Private Limited to set up an Erode, Tamil Nadu plant of 9,000 MT per month capacity, and later approved acquisition of the remaining 25% to make it wholly owned. The plant is expected to be operational in Q2 FY27.

Management commentary: margins, fuel risk, and operating discipline

The concall focused heavily on energy cost volatility. Management shared that Q4 average gas prices were around INR 55.54 per SCM in North, INR 49.6 in South, and INR 46.57 in West, while April prices were higher. Management also discussed the use of biofuel in the North for spray dryers, with overall fuel mix in North including meaningful biofuel usage.

While management did not provide formal financial guidance, it stated confidence in maintaining an 18% to 19% EBITDA margin range under the current scenario. Management also indicated that advertising spend in the new year could be 40% to 50% higher than FY26.

One disclosure that requires attention is the fraud incident at Kerovit Global, where the company stated an ex-CFO was found to have committed fraud of around INR 20.65 crore over the last two years, and a net loss of around INR 19.81 crore (net of recovery) was recorded, with the matter under investigation.

Takeaways

Kajaria’s Q4 FY26 performance reflects a strong margin rebound supported by operational efficiencies and improved realisations, alongside a clear focus on working capital discipline. The company also used the quarter to announce capital return through a buyback proposal and to move toward simplifying bathware ownership structure.

The forward agenda is anchored by a meaningful capacity addition in South India and continued scaling of adhesives. However, near-term risks around fuel cost volatility, Morbi supply uncertainty for outsourced procurement, and tighter internal controls in the bathware subsidiary remain important monitoring points for investors.