Acrysil - Kitchen sinks

[ayushmit]

I am highlighting some negatives PURELY BASED ON NUMBERS and last 15 years HISTORY.

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1) Still majority of revenues are from exports. Who are its competitors in the export market? What's the share of China in overall exports? Is there a possibility of dumping by China in international markets in case China's domestic demand slows down?

Hi Anil,

Yes, the financial ratios etc haven't been good. Its tough to imagine as to how will they scale up quickly with these ratios.

The competitors in export are some big MNCs like Shcock etc....and they are very big players and the potential is good. Infact if one looks at their prices...their products sell at quite a premium and fancy prices. The interesting thing about Acrysil is the way it is expanding the product range and trying to bring those concepts to India too.

Regards,

Ayush

Some critical questions:

[utkarshpatel]

Recently visited Mumbai Showroom in Andheri, asked few questions to the representative there. Based on her reply, here are some key points for Mumbai area. (India's contribution to total sales is 22%)

• Most sales come from real estate tie-ups.
• Walk-in people are very less, around 5-6 a day and sales through them are low
• Have tie ups with Hiranandani Real Estate Group in Powai. But they supply only Stainless steel sinks, most of which are single bowl sinks which are priced at 9215 Rs. Realisations in case of tie ups would be lower, didn't have any exact number.(Single bowl,46cm X 38 cm X 20 cm,are preferred due to space shortage in Mumbai flats).
• Tie-up with RNA real estate group for supplying similar sinks
• Faucets, hobs, microwave oven, chimney sales, disposer are insignificant.
• According to her, complementary sales of other products might pick up in new projects.
• Company doesn't have any tie up with @home or other companies to showcase their products. They can supply the requirement anywhere if one contacts the area representative

Observations:

• Ovens & sinks looked reasonably priced to me, everything else, seemed expensive.
• The area is crowded with many other players from kitchen sinks, home and interior decor segment.
• Due to lack of timing couldn't visit Rocera and other competitors in area, but general impression is competition for walk-in customers could be very high and hence tie-up with RE firms should be the major avenue for increasing sales in future.

[utkarshpatel]

Have collected brochure of different products (Granite & SS Sinks, faucets, food disposer).One can gauge the realizations to some extent from prices mentioned in the brochure.

Scanned copy of brochure can be accessed below:

https://db.tt/5TB4b71d

[utkarshpatel]

Probable Acquisition of foreign business:

Acrysil Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on February 25, 2014, inter alia, to consider and review the principal offer for acquisition of overseas business subject to due diligence and compliance of various laws.

[therev]

Hello

I had visited a CARYSIL dealer here in Cochin few days back. had gone there to check out some other product but managed to talk to the CARYSIL salesman for a few minutes.

Composite quartz sinks are being perceived and marketed as a premium product. athough its priced similar to their own stainless steel sink line ( 14090 rack rate) due to the brittleness there no guarantee for the poduct. The ss sinks last longer.

the GERMAN design and engineering bit was used with elan. a bit of prodding and he said that architects and interior designers recommend it. especially if one has two sinks- one within the kitchen and one in the work area.then there is no rough use in the kitchen sink. On aesthetics the product is extremely good!

it is rare that home owners themselves come asking for this product. asked him what he would like in his kitchen and he said ss sink.

The ss line of CARYSIL also looked good. may be biased but this product is a commodity which is trying to be priced like a brand.

Personally Feel its a high price therefore high quality perception rather than high quality therefore high price situation.

This can be good. but as seniors have pointed out the management is aggressive and earnings quality has deteriorated.

Assuming the product holds, can management scale up significantly to take full advantage of the opportunity?

Views please!

Discl:Not invested

[utkarshpatel]

Hi Ranjith,

What I believed before going was totally different from reality too. SS sinks were much sought after than granite sinks. Totally agree with high price for quality perception and branding of commoditised business. Asset turnover and other ratios has been poor which suggest capital intensive nature.

Most of business comes from exports and further strengthening distribution network outside India may be key to future growth and hence further clarity on recent announcement could make a case for investment if it improves operational parameters.

Recent announcement below:

Acrysil Ltd has informed BSE that the Board of Directors of the Company at its meeting held on February 25, 2014, broadly considered the offer for acquisition of overseas business and authorized Mr. Chirag A. Parekh, Chairman & Managing Director of the Company, to explore proposition further.

[MountainKing]

Is this company worth entering at CMP of 415?

[mmvravindra]

Why there are no updates since 1 and half years?
Last quarter was very bad. OPM down to below 10% from 15% a quarter before.
Any insights?

[sharrmasks]

Company growing at good pace over last ten years. Sales and NP CAGR 26 and 35 %. But valuation is on higher side. Need to improve both margins as well as growth rates to justify valuation. Good ROE At 20 to 25 last decade but it is captured more than enough in the P to b ration which stands at 5. All in all high potential stock which is yet to show good business performance. Being in housing sector, expected to do well over next five years as management is the right noises. Hope the capacity built will show up in numbers and stock will fly like cera, kazaria etc.
( Dis- holding small tracking position)

[sagararya]

The story looks exciting here. However since majority of the revenues come from exports currently, has anyone spoken to distributors outside India and compared the quality/pricing of their products vs competitors/unorganized market?

[ketand]

Anybody tracking this script? It came to my attention as one of the stock near / at 52wk Lo. After a good run, it seems company has got into some financial mess. From quarterly and last two year earnings: sales growth and gross margin maintained on yearly basis, while EBITDA/PAT margins have reduced. More importantly, RoA, RoCE and RoE are at lowest in last ten years! The idea is that if overall trend is still intact, and if this is only a temporary blip, this can be a good candidate. Will study and report if I find something of value to all.

[ausking]

There is a transaction on Acrysil Steel - a private limited entity of promoters of Acrysil. So, to me appears that Acrysil Ltd is funding Acrysil Steel Pvt Ltd to sell back finished product to Acrysil.
Is this approach in the interest of small retail shareholder?

[sivaprakasamp]

85fd4492-3bbb-48e4-8de0-469e6ceb95d6.pdf (1.7 MB)

Acrysil reports a weak set of numbers. .

[sivaprakasamp]

Revised earnings as filed yesterday

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/8407181d-db98-4828-b5ed-e6f36c84a1fa.pdf

[saggy98]

Kindly check the link..its getting error.