₹200 Mil Fraud Case: Is Kajaria Ceramics stock still worth buying after CFO’s money embezzlement?

Synopsis:- A leading tiles manufacturer faces a ₹200 million fraud setback, now treated as an exceptional loss, but swift management action and tighter controls limit long-term damage. Despite muted revenue growth, profit jumped 57%, and a brokerage target of ₹1,550 implies ~59% upside, supported by 87.8 MSM capacity and strong industry tailwinds.

India’s ceramics sector thrives amid rapid urbanization and real estate growth. The ceramic tiles market hit USD 10.45 billion in 2025, with production reaching 2.45 billion square meters in 2023. Exports of ceramic products stood at US$2.71 billion in 2024, while the sector eyes an 8.67% CAGR to USD 15.84 billion by 2030, fueled by housing schemes.

With a market capitalization of Rs 15,659.65 crore, the shares of Kajaria Ceramics Ltd were trading at Rs 983.20 per share, increasing around 0.94 percent as compared to the previous closing price of Rs 974.05 apiece.

Fraud Case

Recently, the Rs 200 million fraud came to light due to internal process upgrades and MIS audits implemented over the last 1–2 years at Kajaria Ceramics Ltd. The embezzlement occurred during the capex stage through fake vendor creation, forged signatures, and inflated CWIP, with funds routed as advance payments across FY25 and YTDFY26.

Management responded swiftly by terminating the CFO, filing a complaint with the Delhi Police (EOW), and strengthening controls. Only ₹6 million has been recovered so far, with full recovery unlikely. The net loss will be treated as an exceptional item in H2FY26, and a forensic audit remains an option if required.

Brokerage Recommendation

Despite recent governance concerns, Kajaria Ceramics Ltd received a vote of confidence from Emkay, which maintained a ‘Buy’ rating with a  Rs 1,550 target price. This implies an upside of nearly 58% from the current level of  Rs 983.20, suggesting the brokerage views the fraud incident as non-structural to long-term valuations.

As per brokerage, Kajaria Ceramics Ltd has significantly strengthened its internal controls over the last 1–2 years by upgrading IT and MIS systems, making vendor onboarding largely automated and reducing manual intervention. While the parent company is already covered, subsidiaries are expected to migrate within 3–4 months, with additional safeguards planned to prevent recurrence of such frauds.

The company delivered a mixed Q2FY26 performance, with revenue inching up 1% year-on-year to ₹1,186 crore from ₹1,179 crore. However, profitability improved sharply, as net profit surged 57% to ₹134 crore, reflecting better margins, cost discipline, and improved operating efficiency despite muted topline growth.

Kajaria Ceramics Ltd has built a strong manufacturing footprint with 87.8 MSM tile capacity spread across India and Nepal. Key plants in Rajasthan, Gujarat, UP, Andhra Pradesh, Telangana, and Nepal enable diversified production of ceramic, polished vitrified, and glazed vitrified tiles, supporting scale benefits, supply flexibility, and leadership in the domestic tiles market.

Kajaria Ceramics Ltd is India’s largest manufacturer of ceramic and vitrified tiles, with a strong pan-India presence and decades of industry leadership. Backed by a wide product portfolio, extensive manufacturing capacity, and a robust distribution network, the company serves residential, commercial, and infrastructure segments across domestic and export markets.

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