Kajaria Ceramics Key Ratios

The decline in ROE from 19.2% to 13.08% over the last four years suggests a weakening in overall financial performance, primarily attributed to a falling PAT margin.While asset turnover remained relatively stable, a notable drop in profitability (PAT margin) directly impacted ROE, indicating that operational efficiency is being overshadowed by declining margins.The leverage ratios have remained steady, showing that the company's financing structure has not significantly influenced ROE, reinforcing that profitability is the dominant factor in the recent trends.

Inventory days have increased from 39.63 to 43.35, indicating a slower turnover rate which may point to overstocking or declining sales efficiency.Receivable days demonstrate stability but have risen slightly, suggesting that management might be allowing longer credit terms, potentially straining cash flows.The cash conversion cycle has shown variability, reflecting challenges in managing working capital effectively, implying that liquidity management needs attention.

The decline in ROE aligns with falling ROCE and ROA, suggesting a consistent reduction in efficiency across equity and asset utilization over the last four years.ROCE has also decreased significantly, indicating that the company is generating less return from its capital employed, and this is a growing concern for stakeholders.Overall, the underlying weak returns suggest insufficient operational performance and necessitate a strategic rethink on improving profitability and asset effectiveness.