I live in US,I can help you out on the scuttlebutt. From whatever little i know,housing is in good demand again but definitely not to the levels of 2004-2007.Most of my friends have bought houses recently and all of them have granite as the kitchen countertop.Flooring is mostly wood(No tiles/marbles like in India) or carpets/rugs here.
But I rememeber one of my friends asking his builder to install Quartz for his kitchen when he bought the house.
So,clearly there are advantages with quartz over granite and some of them are:
1.Granite being a natural stone needs to be sealed properly because of porosity (I guess the sealing has to be done every 10 years). With Quartz you dont have such headaches given the process of making quartz is by taking a rock,crushing it and adding a polymer resin to it and running it through a diamond polishing machine will permanently seal that product.Hence it does not promote growth of germs,bacteria.
2.Since it is a man made stone,Quartz comes in variety of colors and size compared to Granite.It is very consistent in size and shape as well compared to natural stones.
Market share of Granite in US is 27% and Quartz is around 8%.In other developed countries like canada,Australia quartz share is more than 30%.
Given that pokarna markets both granite and quartz which are in high demand for kitchen countertops and its presence in US,it is very well placed to take advantage of this boom.
There are many unknown facts around its business:
1.Pokarna has 2 manufacturing units with a total capacity of 6 lakhs sq.feet per annum.How much is this utilized? Given 50% of revenues coming from this segment it is better to understand if there is any planned CAPEX on this?
2.Quartz has a total capacity of over 8 lakhs sq. feet per annum ,reports suggest that capacity utilized is less than 50% and no need of any investment in the next 3 years.Is that correct?
3.For both segments,how much raw materials are being sourced from their captive mines and how much they are getting it from outside?In this business getting quality raw materials consistently is the key.
4.Breton technology - How big of a deal is this? Any other similar technology that is similar or better than this?
5.Marketing - I know they are in this business since 1991 and they might have got hold of decent client base.But still not sure how strong their marketing is?
6.Competitive landscape:As of now 10-12 sizeable manufacturers use Breton technology.But how do we know if Breton’s license is restricted to only these players?In case,if more players gain this license or if better technology gets introduced,they will flood the market and reduce its competitive ability.
Regardless of all these,those numbers are off the charts (that is the big pull factor on this stock).