Why did Kajaria Ceramics witness such a sharp fall in the net profits for the fourth quarter?

Kajaria Ceramics reported 15.7% higher revenues for Q4FY22 at Rs1,102 crore. FY22 full year revenues were higher by 33.2% at Rs3,705 crore. Kajaria tiles division saw revenue growth of 15.5% to Rs1,000 crore while the bathroom and sanitaryware business grew 17.6% at Rs102 crore. Like in the case of most companies, the FY22 net cash from operations fell 16.3% to Rs453 crore on higher inventories and trade receivables. In short, working capital constraints are locking up more funds in the cycle.

Net profit for Q4FY22 was down -24.7% at Rs95.76 crore. It was not a question of raw material costs but more of power and fuel charges being up 57% on a yoy basis. That triggered a sharp fall in net profits. The tiles and sanitaryware businesses took a hit on account of elevated cost levels, since power is a key cost component. Net margins were 8.69% in Q4FY22 compared to 13.34% in Q4FY21 and 11.42% in Q3FY22. Board approved final dividend of Rs.3 per share taking total dividend to Rs11 per share for the full year.