Acrysil fy2018 updates and outlooks…
1.management guidelines on topline targets…
short term-3yrs… 300cr
medium term- 5 to 6 years… 500cr
longer term - 10-12years… 1000cr
product mix in the 500cr medium term target…
Sinks-50%
appliances-20percent
bath segment-30%
fy19 over fy18 growth in topline 20%
ebitda margins to growth to 16 to 17% form the current 14 percent…
key drivers in topline growth…
- major contracts with big ticket international companies[who own huge retail chains] , the orders are finally flowing in , in increments[quartz sink section]…
- 7 to 8 export countries added to the list
- sternhagen which has underperformed will 3x its topline contribution
4.new products launched in quardo sinks- micro radius and square sinks and capacity of the quadro sinks has been doubled
5.the capex they did in gy18 in terms of new moulds has been approved by the customers and will generate mor eproduction this year, typically there is a one year lag between capex and conversion into sale figures
6.new products launched in the appliance segment and several promotion offers like combo offers etc has been put into marketing
7.traction being received from the market after 2 years of intense advertising
Margin growth…
- RAw materials…
mainly the sharp spike in the resins that are imported [2.5x rise in the past fy]
this hike has been passed onto the customer side only 30 to 40percent…
the remaining 60percent they expect to be passed on thin the course of this fy
2.the advertising expense will be much lower this year, as they feel they have done the adequate part of the job already in the past 2 years… - the high margin sternhagen products generate lower revenue, withthat into the mix with 3x topline, the margins will be tailwinded to small extent
CApacity utilization… quartz sink-83% [in q2 investor ppt, there was a mention of a new plant to be started in fy19, couldnt get the time to verify in concall]
SS sink… 60pecent
Appliance… is a trading business, no in situ production per say
sternhagen… has again manufacturing unit and a trading unit, the Capacity utilization of the former is 20percent at present
export to domestic topline mix is 70pc to 30pc breakup…guided topline growth to be 20percent normalized to both the sections
domestic sales in fy18 is 60cr total…
Sternhagen…
one of the top 3 of the luxury brand in india[ based on product aesthetics and quality]
100% owned subsidiary
the manufacturing division has a margin of 60 yo 70%
the trading unit has 40percent
the mix is 50-50 …
this year, the topline was mere 3cr[demo , gst and pan-delhi show room shut down affected the sales]…
fy19 expectation is 9cr…
although the start of sternhagen was with a premium brand outlook they plan to approach this in a top to bottom fashion… there has been numerous queries from the builder and the realty market space, which cater to the sub premium variety of product demand, where the volume offtake they expect to be massive with time with obviously lesser margins… they are venturing into that… they mention sternhagen which is primarily a bath segment, whose expected topline generation for thsi year is below 10cr, has a multiplier potential with time as they step down and increase their product mix in the high demand areas with lower value addition than the classical sternhagen products as of now which are in the show rooms…
the bath segment, which generates just 3cr out of the 198cr topline, is expected to form 25 to 30pc of the 500cr topline in coming times, within 5years…
the rationale for entering in to the bath segment is , that 90percent of the acrysil deals across products are mainly into bath segment, so it is common sense that, exploring into bath segments will have a natural distribution channel open to them already which they want to exploit…
Bath segment is going tobe marketed in UK from q2 onwards, via homestyl uk
Homestyl UK
Purely a distribution unit
no production line
revenue generated 39cr
of which 30% is quartz sinks , which are 100percent acrysil products
rest they sell third party products
reason for acquisition was to access the distribution channel to the UK market…
Bathroom product to be launched in UK at the middle of the year
Niche play- 3D concrete tiles…
1.acrysil will be the second company in the world to launch this, after a reputed hungarian company who is selling the patent to acrysil…
2.to be launched in india first, under the brand sternhagen
3.composition= quartz+ concrete+ other minerals
4.An existing line up of sternhagen premium quality 3d tiles already exists… but, this are very expensive …
these tiles quote at rs.1000 to 1200 per sq, while the domestic market tiles which are in demand quotes at 200-300rs/sq , these 3d concrete tiles will be quoting at 300 to 500rs/sq, along with a premium look… they expect to enforce good volume offtake, hence the pricing model will be done so that the market absorbs it well…
5.the premium sterhagen tiles which are marketted in US, has a very high input cost also…
the cost of the moulds are 10,000usd per mould, in case of concrete tiles, the cost will be reduced to less than half…
6.very bullish on the initial test marketing results and comments that the market has well received the product…
7. dosent put numbers on the capacity that is planned to be set up…
yet…they mention , this is phase one of the venture
. investment is…3 to 4cr of which 50percent is for the technology provider cost…
annual topline generation 5 to 6 cr as of now…
8. not only the volume possibility in this 3d concrete tiles massive, but also there are significant oem supply opportunities…
Quartz sink market outlook…
Germany and France- quartz sink has surpassed the market share of stainless steel this fy18
Uk and US both are stainless steel dominant markets where the quartz sinks are disrupting the scene , specially in uk the quartz sink is expected to surpass the market share of stainless sink in next 2 to 3 years…
globally now quartz sink forms only 10percent of the market share of the sink space
it is expected to capture 20percent of the share in coming 3 to 5 years…
Only 4 manufacturers remains in the quartz sink production business…
not much capex plans are there from the other 3[unnamed]
the supply demand gap is visible…
plans to ramp up distribution of the stainless steel sinks to replace the market dumping from china
promoters have infused 8.5cr of capital into the business by issue of warrants with final price of 550/- per share
the short term target of 300cr of topline generation., will not require any more capital infusion
debt…
indian- 1.working capital 53cr , term debt- 15cr[ payment term 5 years]
foreign debt- 12.5cr[homestyl uk] [to be paid off in coming 3 years]
plans to maintain debt to equity at 0.8 to 1
capex for fy 19= 12cr
asset turn over ratio to be maintained at 2.5 to 3 times…
free cash flow generated in fy18=24cr
inventories are expected to decrease this financial year
Q1 topline growth in line with expectations of 20%
Disclaimer… invested and averaging…
most recent investor ppt…https://drive.google.com/file/d/1mTtUWWJE1Utu279_2Jcs6Bi1LaIosJAH/view