Brics PCG recommends a "Buy" on Murudeshwar Ceramics. The company's products comprise ceramic and vitrified floor and wall tiles, sold under the brand name Naveen Diamontile. It is a part of the Rs 600 crore Karnataka-based RN Shetty Group.The company has a turnover of over Rs 180 crore and a 30% market share in the tiling segment. The company is poised for robust volume growth on account of new capacity additions for both vitrified and ceramic tiles.Although it had halted ceramic tile production a few years ago, it now plans to reintroduce this product into the market using a technologically enhanced manufacturing process and is aiming for better volumes led by cost efficiency. It is a strong regional player, according to the report.The profitability of the tile industry is highly dependent on freight charges, both for raw material and finished products. The company enjoys a dominant position in south India where it commands more than 50 per cent of the market share. Its strong footing in this region is supported by freight cost savings arising from the locational advantage of its manufacturing facilities.Moreover, it enjoys the highest operating margins in the industry because of its strong presence in the lucrative value-added and vitrified tile segments.
