Carysil (earlier Acrysil) - Kitchen sinks

[Capsule91]

Q1 financial notes…

operational topline growth- 30.66% yoy and 18.87% qoq

EBITDA- 808.26L [growth yoy-19.85% and growth qoq- 49.31% ]

EBITDA adjusted with forex loss/gain-
growth is 38.63% yoy and 64.6% qoq

PAT growth yoy 16.66% and qoq is 77.14%

Ebitda margin- 13.42% (q1 fy19) ,
14.1% (q1fy18) ,
13.84(q2fy18)
9.39%(q3fy18) ,
10.6%(q4fy18)
11.9%(fy18 annual)

the current ebitda margin is maintained from 14.1% to 13.42% , with a parallel inflation of cost of raw material by 40.39% and additional forex loss of 125.17L in q1fy19 from a gain of 1L in q1fy18…
NO wonder margins got hit in q3 and q4, but essentially they are back on track with the business…
EBITA to sales- 0.14 in q1fy19 compared to 0.12 full year fy18

the other expenditure has been the highest in the past 6 quarters , up 13% since the last quarter… if there is a presence of some one off item there, to be verified in the concall , which might have been incurred while doing the capacity hike…

the growth in the stand alone business was 35% yoy and 17% qoq
ebitda margin stands at 14.2% for q1fy19 vs 13.42% for the consol ebitda
the subsidiaries clocked 9.14% ebitda only…

what is most surprising is some gearshift happened in the business for sure this time…
the standalone ebitda[specially] and topline have jumped up a lot , while the subsidiary ebitda degrew by a huge amount! , the subsidary ebitda margins are at a record low and with this degrown ebitda and margin , there has been a growth in the subsudiary business …
to explain in numbers,
here is my PnL breakup spreadsheet …
Q1 acrysil.pdf (421.0 KB)

the subsidiaries companies are the following taken together…
Acrysil Appliances Limited
Acrysil GmbH - Germany
AcrysilSteelLimited
Acrysil UK Limited - United Kingdom
Homestyle Products Limited - United Kingdom
Sternhagen Bath Private Limited

SO the sink division took the hugely lagging subsidiaries and closed the quarter with good number…
so 2 things from here…

1. what drove the margins and the topline in the standalone business all of a sudden in this quarter? a 90.5% ebitda growth and a complete turnaround of margins from 8.56% to 14.2% compared to q4fy18!

2. what happened to the subsidiary business which enjoys 18 to 22 percent margin , suddenly dropped to 9.14% !

in relation to question 1…
the probable things might be as the company mentioned in the concall previously…

@Capsule91

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

@Capsule91

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…

so some imput price seems to have been passed on to the customers definitely …
but then again, when they guided for the advertising expenses to be lesser from this fy, why is the other expense high in this quarter…

and i wonder , when a depreciated rupee state can jump up the forex loss on finance cost by 5x qoq,{in the consolidated numbers} , but the loss seems to have decreased in the standalone numbers qoq, so the depreciated rupee might not be a factor here and the same appreciated dollar state might not have played much aiding the topline and margins, in the standalone numbers… another thing to be clarified from the management…

the PnL statement…
https://www.bseindia.com/xml-data/corpfiling/AttachLive/b267493d-f929-4530-97e2-6013c0c0e0e4.pdf

To me, the management has walked the talk and failed again at the same time… the guidance for the bath segment was still optimistic in the q4 call, Ashish kacholia had a disappointed sense during the call when the under performance of sternhagen was highlighted…
it has been 4 quarters, since the street has been expecting traction from the subsidiaries, nothing on it yet and i am kind of disappointed to see the subsidiary under perform as a whole… they did mention they will focus on grabbing form topline and volume from the appliance business and would include combo offers etc, that might have weighed down the earning and margin compared to topline inspite of the growth of later…

But the cyclical play in the sink business seems to be playing out nicely…

if the subsidiary contribute to the ebitda gradually , the outlook would be exciting…

the management guided for a ebita margin of 16percent for the full year and a topline growth of 20percent…
if q1 runrate can be maintained the earnings growth should be near about 40percent, beating the guidance by a good amount…

disclaimer… invested , and averaging