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Investing.com - UBS has upgraded Kajaria Ceramics (NSE:KAJR) Ltd (NS:KJC) from Neutral to Buy, raising its price target significantly to INR1,600.00 from INR925.00.
The upgrade follows Kajaria’s Q1 FY26 performance, which featured a 560 basis point quarter-over-quarter EBITDA margin improvement, with management expecting further gains. The company has announced several initiatives including unification of its sales force across products to eliminate duplication and reduction of direct and indirect costs.
UBS reports positive feedback from distributor checks regarding the new strategy, noting that the market may not be fully pricing in the sustainability of these improvements. The firm has increased its FY26/27/28E EBITDA margin estimates to the 17-19% range.
The promoters’ decision to forgo compensation (Rs170m in FY25) until Kajaria delivers at least Rs10bn in annual EBITDA, compared to Rs6.2bn in FY25, signals confidence in the company’s performance trajectory according to UBS.
UBS has subsequently raised its earnings estimates by 36%, 25%, and 31% for FY26, FY27, and FY28 respectively, citing that an uptick in demand should lead to improved operating leverage and further margin expansion.
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