Kajaria Ceramics: Emkay Global Maintains 'BUY' Despite Rs200mn Fraud in Subsidiary

• Kajaria Ceramics' subsidiary Kerovit Global reported a Rs200mn fraud, representing 13% of Kerovit's FY25 assets.
• The embezzlement occurred over two years, highlighting past weak practices, but management has handled the situation effectively.
• Actions taken include terminating the subsidiary's CFO, filing a police complaint, and strengthening internal controls.
• Emkay Global Financial believes the fraud will not impact Kajaria Ceramics' valuations and maintains a 'BUY' rating.
• The Rs200mn fraud amount, if not recovered, will be recorded as an 'exceptional loss' in FY26; target price set at Rs1,550.

Why It Matters: Emkay Global recommends 'BUY' on Kajaria Ceramics at Rs1,550 despite a Rs200mn fraud in its subsidiary.