BENGALURU (Reuters) – India’s largest tile maker Kajaria Ceramics Ltd reported a bigger-than-expected quarterly profit on Tuesday, as strong demand for its products offset higher expenses.
The company said its consolidated net profit rose about 13% to 1.08 billion rupees ($13.21 million) in the quarter ended March 31.
Analysts on average were expecting a profit of 1.01 billion rupees, according to Refinitiv IBES data.
A real estate boom and pent-up demand for renovations have helped sales of fixtures and other home-building items like tiles.
Consolidated revenue from operations for the New-Delhi based firm rose over 9% to 12.05 billion rupees, signalling robust demand for its products – vitrified and ceramic tiles.
“We remain optimistic about the demand outlook for the tile industry,” said Chairman Ashok Kajaria.
But ceramic product makers like Kajaria and rival Somany Ceramics, are dependent on natural gas to power their tile-manufacturing kilns, and rising prices of the fuel have eaten into their margins.
The company’s consolidated cost of raw materials consumed jumped 19% to 2.59 billion rupees in the fourth quarter, while consolidated power and fuel costs rose about 6% to 2.41 billion rupees.
Consolidated core profit margins of the company fell to 14.60% in the quarter, from 15.06% a year earlier.
The company said its board approved an investment of 36.8 million rupees in Sunsure Solarpark Two Pvt Ltd and increased investment in unit Kajaria Plywood by 100 million rupees to 700 million rupees.
It also declared a final dividend of 3 rupees per share held.
Shares of Kajaria Ceramics rose as much as 1.9% after the results.
($1 = 81.7800 Indian rupees)
(Reporting by Hritam Mukherjee in Bengaluru; editing by Eileen Soreng)