Tile makers are grappling with a bleak demand scenario. A recent dealer channel investigation by Nuwama Research with various stakeholders in the ceramic value chain reveals that even after the festive season, demand remains low and has not picked up.
Furthermore, exports have not seen a meaningful increase due to the Ukraine war. There has been a significant increase in credit period to 60-90 days, which was reversed in post Covid cash sales, the report further explained.
In fact, the brokerage house has revised its outlook for listed tile makers Kajaria Ceramics Ltd and Somani Ceramics Ltd. The March 31 Nuwama report said it would take a few quarters to return to normalcy.
Meanwhile, a dealer channel investigation by JM Financial Institutional Securities Ltd revealed that the competitive intensity in this sector is increasing. “Tile players are witnessing an increase in competitive intensity as many regional brands are expanding their footprint to become national players. Apart from widening their footprint, regional brands have also moved from the project business to the mid-premium and premium end of the retail segment. has shifted its focus till March 30, JM Financial said in a report.
Given modest demand and increasing competition, tile companies are expected to continue taking advantage of lower gas prices in the form of discounts to boost sales.
Meanwhile, the stock’s performance has been mixed so far this calendar year with Somany giving positive returns of around 4% and Kajaria down around 9%.
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