Kajaria Ceramics recorded a 5% YoY growth in Q2 revenue, amounting to Rs 11.8 billion. However, the company's EBITDA and PAT declined by 12% and 22% YoY, respectively, reaching Rs 1.6 billion and Rs 843 million, which was below analyst expectations.

The decrease in gross margin, down 252 basis points to 56.6%, was due to input cost pressures. Nevertheless, cost-control measures helped limit the drop in EBITDA margin to 13.5%. Despite these challenges, the management foresees strong demand in the tiles industry for the second half of the year, driven by a robust real estate sector.

The stock has experienced a 19% decline from recent highs, with a 9% and 15% drop over the past week and month. As a result, there is a potential upside of 35%. Analysts have revised their target price to Rs 1,695, based on a 40x FY27 earnings multiple, which represents a significant increase from the previous target of Rs 1,520.