IGI Logo

India's Kajaria Ceramics reported a surprise drop in fourth-quarter profit on Tuesday, hurt by increased costs and weak demand.

Kajaria's consolidated net profit fell 5.2% year-on-year to 1.02 billion rupees ($12.2 million) in the fourth quarter. Analysts, on average, had expected profit to climb to 1.26 billion rupees, according to LSEG data.

Domestic demand for tiles was weak during the January-March quarter and the Red Sea crisis dampened exports, according to analysts. This trend follows minimal volume growth in the tiles industry in the first three quarters of fiscal 2024.

Tiles, used frequently in housing and commercial building projects, is yet to see a pick-up in domestic demand that follows a recovery in the real estate sector. As a result, Kajaria's sales volume grew 5.5% in January-March. It had risen 11% in the fourth quarter of fiscal 2023.

Kajaria's revenue from operations rose 3% to 12.41 billion rupees.

"We maintain a positive outlook for the tile industry's demand in FY25 given the exports momentum likely to sustain and rub-off of strong real estate demand likely to drive improvement in off-take for tiles in fiscal 2025," Ashok Kajaria, the company's chairman, said in a statement.

Meanwhile, analysts anticipated that Kajaria's power and fuel costs would go down as the company uses cheaper biofuel. While these costs did decrease, the company spent more on merchandise and equipment, and had costs in the form of inventory.

As a result, expenses climbed 4.4%. Its purchase of stock-in-trade, or merchandise and equipment, rose 10.2% and inventory costs surged 94.8%.

Kajaria Ceramics, India's top tile-maker by market value, is the first among its peers to report results for the January-March quarter.