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Investing.com - HSBC has reiterated its Buy rating on Kajaria Ceramics (NSE:KAJR) Ltd (NS:KJC) with a price target of INR1,500.00, citing ongoing cost rationalization efforts by the tile manufacturer.
The firm expects sustained improvement in the company’s performance as Kajaria implements several cost-cutting measures across its operations. Among these initiatives, HSBC notes that company promoters in management positions have stopped drawing salaries until the business achieves a desirable EBITDA run-rate.
Kajaria is also unifying its three tile categories into one, which will allow for optimization of its sales team structure. Additional cost reductions in areas such as travel and packaging are being implemented simultaneously.
HSBC estimates these combined measures could potentially deliver a margin improvement of approximately 2%, though it acknowledges that some of these savings might be passed through to customers to stimulate sales growth.
The research firm views the sales team optimization as a strategic move during challenging market conditions, noting that it increases the company’s ability to respond quickly to changing market dynamics.
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