Kajaria Ceramics vs Somany Ceramics vs Asian Granito

This article will do a comparative analysis of Kajaria Ceramics vs. Somany Ceramics vs. Asian Granito stocks in the ceramics sector of the tiles brand in India.

Comparative Analysis of Ceramics Sector Stocks

Introduction

This article will analyze Kajaria Ceramics vs. Somany Ceramics vs. Asian Granito best tiles company in India, stocks in the ceramics sector.

Kajaria Ceramics vs. Somany Ceramics vs. Asian Granito

Indian Ceramic Industry – Current Scenario

• The size of the total ceramic industry is close to Rs.27,000 Cr. Still, the revenue generation through the major national brands in the ceramics sector (statewide or exclusive dealers) is merely Rs.12,000 Cr. The remaining almost Rs.15,000 Cr business is being contributed from regional brands or local players in the ceramics sector. The price competition between the regional ceramic brands and the national brands may pose a threat to the national brands.
• But after the GST implementation, the local/regional brands which were not compliance-oriented earlier can fetch problems due to it in the future. In such a scenario, national well-established brands can be benefited from the same. Also, due to the increase in disposable income, the customers are getting a lot of awareness towards the national ceramics brands.

Company Overview

Kajaria Ceramics

• Kajaria Ceramics, incorporated in 1985, is the largest manufacturer of ceramic and vitrified tiles in India.
• The company manufactures more than 400 flooring solutions such as wall tiles, Floor tiles, vitrified tiles, and Spanish and Italian tiles.
• The company has an in-house research and development facility that focuses on developing new designs and creating cost-effective products.

Somany Ceramics

• As part of the ceramic sector in India, Somany Ceramics was incorporated in 1969.
• With the forward-thinking, innovative, and futuristic approach, Somany ceramics are at the forefront of style and quality. Its product portfolio consists of ceramic glazed tiles, vitrified tiles, sanitary ware, porcelain somany floor tiles, somany bathroom tiles.
• Due to the constant endeavor to be the first to introduce new products in India, Somany has been and will always strive to be a dynamic leader in its field.

Asian Granito

• Asian Granito India is engaged in the manufacturing of flooring solutions. It was incorporated in 1995; the company is one of India’s leading wall tile manufacturers.
• Asian Granito India is India’s most prominent tile manufacturer in the wall segment. There are 18 business centers in India, 10 Asian Exclusive showrooms, and more than 3000 business partners in the company.

Comparative Analysis

Kajaria Ceramics vs. Somany Ceramics vs. Asian Granito

Market Capitalization

• Kajaria Ceramics is the largest listed ceramic company in India according to market capitalization, revenue, and sales. The market cap of Kajaria is almost Rs.9,200 Cr.
• After Kajaria ceramics, the Somany Ceramics and Asian Granito India are the two significant companies in the Indian ceramic sector with the market capitalization of Rs.1,860 Cr and Rs.767 Cr, respectively.

Profit After Tax (PAT) TTM

• While analyzing an Indian-based company with several subsidiaries in different countries, we should consider the consolidated financial results of that parent company. It is therefore important to consider the total revenue or net profit of all the businesses.
• The Profit after tax (PAT) for the trailing twelve months (TTM) of Kajaria ceramics (consolidated) is Rs.229 Cr. The PAT numbers (TTM) for Somany & Asian Granito are Rs.47 Cr and Rs.20.71 Cr.

PAT Margin

• PAT Margin of Kajaria cearmics is 7.75%. While the percentage of PAT margin for Somany is 2.73% and for Asian Granito is 1.74%.
• We can see a considerable difference in the PAT margin percentage figures of Kajaria and Somany and Asian Granito. So, here also, Kajaria ceramics is a clear winner.

Return on Capital Employed (ROCE)

• ROCE = (EBIT / Total Capital Employed)
• ROCE of Kajaria ceramics is 26.10%, while ROCE numbers of Somany and Asian Granito are 15.25% and 15.85%, respectively.

Return on Equity (ROE)

• ROE = (Net Income / Shareholders’ Equity)
• ROE numbers of Kajaria, Somani, and Asian Granito are 18.60%, 13.38%, and 12.60%, respectively. Thus, we can see that Kajaria has higher ROE than the other two.

Price-Earning ratio (P/E Ratio)

• PE ratios of Kajaria Ceramics, Somany, and Asian Granito are 40.9, 33.21, and 37.08, respectively.
• In this case, Kajaria ceramics is enjoying a premium valuation compared to its peers due to the higher PAT margins, ROCE, and ROE numbers.

Debt to Equity Ratio (D/E RATIO)

D/E ratio of Kajaria is 0.06. While D/E ratios of Somany and Granito are 0.84 and 0.73, respectively, which are very high compared to Kajaria ceramics.

Interest Coverage Ratio

• When any stock has a higher D/E ratio, we should always consider its interest coverage ratio while analyzing the stocks.
• The interest coverage ratio of Kajaria, Somany, and Asian Granito are 24.28, 3.01, and 1.82, respectively.
• Working capital requirements are high when the interest coverage ratio is low. As a result, it is better for the company if the interest coverage ratio is higher.