India’s Kajaria Ceramics misses Q2 profit view hit by weak tile demand

BENGALURU (Reuters) -India’s Kajaria Ceramics reported weaker-than-expected second-quarter profit on Friday, hurt by sluggish domestic demand for tiles.

Consolidated net profit was 1.08 billion rupees ($13.00 million) in the quarter ended Sept 30, missing analysts’ expectations of 1.22 billion rupees, according to LSEG data.

It had earned 698.6 million rupees a year earlier when it was hit by high gas prices and weak demand.

“Weakness (in demand) will continue for this year. There could be some uptick in the second-half of the year but for this year (volume)growth will be in single digits for Kajaria,” said Praveen Sahay, research analyst at Prabhudas Lilladher.

He said demand is expected to improve from next year as the real-estate sector continues to do well.

Revenue from tiles grew a moderate 2.9% to 10.13 billion rupees.

Consolidated revenue from operations rose 4.1% to 11.22 billion rupees.

The company had in May projected revenue growth of 14-16% for this fiscal year.

Power and fuel expenses fell over 17% to 2.21 billion rupees as natural gas prices remained largely stable during the quarter.

Lower prices of natural gas aid the margins of ceramic product makers as they depend on fuel to power their tile kilns.

Shares of the company fell as much as 3.8% after the results.

($1 = 83.1055 Indian rupees)

(Reporting by Nishit Navin in Bengaluru; Editing by Dhanya Ann Thoppil)