POKARNA LTD ( Stock opportunities )


#492

Quartz busimess continue the traction
Margins and topline in granite business has taken a hit, maybe the downcycle in leu of the oversupply in granite segment mainly from the brazilian and the chinese suppliers have flowed in, hopefully manageemnt can brief the outlook there in concall if held… Another couple of quarters or maybe a few.more of watch required to see where the equilibrium happens…

Meanwhile, duty on chinese exports of quartz is in discussion in the us council…

Imo, next 2 years would be a gestation period for the company in utilizing the new quartz capacity, getting somewhere with the granite business and managing debt levels…

Disclaimer… not invested, watching closely


(Yogansh) #493

Hi All,

Sharing my notes from Pokarna’s Q1FY19 concall. You can also read the transcript from here.

Q1FY19
* Growth of 22% to a large extent which was driven by strong performance of Quartz business and also partly owing to the low base of the last year.
* Business environment for Granite continue to remain challenging owing to highly competitive intensity and currency headwinds.
* Realization remains under pressure owing to rising competitive intensity.
* Currency depreciation as well is causing certain challenge for the business.
* Chinese possibility of the tariff, Quartz coming at a low price will be again, I assume replaced by low value Granite.
* But, margins will never be there because there are too many players now and too many options.
* Polyester resin key RM input for our Quartz business has seen an increase in prices in recent times following the rise in crude prices.
* We have applied for requisite regulatory approval for commencing the work on new Quartz plant and civil work should start on the same shortly.
* Plant will be situated at approximately 25 kilometers from Rajiv Gandhi International Airport.
* And is close proximity to ICD, Hyderabad which is well connected by roads to key domestic ports.
* Facility will cater to both international as well as domestic demand.
* We have started servicing IKEA, Hyderabad.
* In quartz presently we work to full capacity.
* We are exploring ways if we can put some small investments to improve the total yield till the new plant comes up.
* New plant should come up in another 18 months.
* Regarding Chinese tariffs, we are yet waiting because this is all paper news which is happening but no new tariffs have come yet.
* In the US market, the Quartz share of Chinese is in excess of 60%
* Regarding converting our rupee loan to ECB our lead bank and IOB have agreed. Only BOI is remaining, we will give them a month otherwise convert the remaining loans.
* Apparel business stake sale not getting any reasonable valuation or any customer.
* We do not hedge our sales.
* However, rupee fall’s benefit will be off set with our earlier foreign currency loans where we have to account for today’s price in the books.
* Term loan is 44 Cr & in the Quartz business we do have the promoters’ loan 85 Cr
* Completed about 80 installations through Ikea.
* It is just done for their new store and some sample and trial stores
* Actual customer flow will start now.
* Lot of people especially with the Breton Stone Technology are adding more capacity gradually.
* Chinese granite vs Indian granite will be 20-25% cheaper.

Regards,
Yogansh Jeswani
Disclosure: Invested


(nil_71) #494

Pokarna- all things are fine. But unless the capacity expansion happens, no growth.


(roysavio) #495

ICICI Direct gives a price target of 200. The report paraphrases some of the points mentioned in the conference call (and listed in a previous post). Nothing really new in the report:

http://content.icicidirect.com/mailimages/IDirect_Pokarna_Companyupdate.pdf


(Radiozammy) #496

Q2 Results out : Net profit of Pokarna rose 63.27% to Rs 19.69 crore in the quarter ended September 2018 as against Rs 12.06 crore during the previous quarter ended September 2017. Sales rose 29.74% to Rs 110.34 crore in the quarter ended September 2018 as against Rs 85.05 crore during the previous quarter ended September 2017.


(Prasun Johari) #497

Thanks. Any idea why PAT and sales rose so dramatically this quarter?


#498

(roysavio) #499

Thanks for the video. For folks not having time to watch the video, the uptick in the numbers is being attributed to US duties on China and improvement in the US market. I wish though the ladies had asked more pertinent questions like info on the expansion (current situation) and maybe what the India market has to offer given that most of the inflows are from the US.


(Radiozammy) #500

Pokarna is holding an investors/Analyst call to discuss the Q2 results. This will be a good forum to listen in for anyone interested to dig deeper into current and future growth and scope. Its on 15th Nov, at 12pm, more details in the attachment.


(sjain_13) #501

My sense is that though Quartz business may not grow till new capacity comes in, granite business can grow due to duties on China. The capacity is not fully utilised.


(roysavio) #503

Very good results from Pokarna. The quartz business is really scaling up well.
Need to hear management commentary to see if it is again because of reduced trade from China.


(Vishal Agrawal) #504

The numbers are indeed very good. With Net Profit of 9 Months exceed previous full year’s profits. However a lot seems to be due to duties imposed on China. Need to understand how sustainable is this , that too without any capacity addition.


(roysavio) #505

The investor presentation doesn’t say much on how they got to these fantastic profits this quarter:


(roysavio) #506

Nice report from ICICI Direct (publicly available). It mentions the conference call highlights. The fantastic numbers are because of granite (as expected) and demand shifting from China to India.
Negative: Many quartz producers are springing up in India, so we’ll have to see if Pokarna can stave off competition. Either way, the pie in the US seems big enough for all and Pokarna gets 98% of its revenues from the US.


(axiskumar) #507

https://stoneupdate.com/us-stone-imports/statwatch-monthly-report/1686-statwatch-december-2018-the-china-conundrum

India exports 300 % up in Dec 2018…as per this report.

Disc: Invested…no buy/sell recommendation…


(Pratik--Patel9) #508

It’s amazing to see that Chinese export in US reduced by 85% while Indian import increased significantly. What makes it more interesting is that overall import of quartz in US had reduced. This might be because changing dynamics of imports might take some time to shift from China to countries like India and hence I feel that this might just be a beginning for Indian exporters like Pokarna. In last quarter the quartz division saw growth of 79% which validates that good numbers were driven by higher demand from US. I think this might continue benefiting Pokarna as it’s more than 90% revenue comes from USA.

Current valuation is also very comfortable because its available at trailing PE of about 8 while 8 year average PE has been around 10. However increasing crude prices and rupee might affect the margins.

Does anyone have more clarity on quartz capex status? Is new capacity for quartz coming on line by next 6 months? And what is the magnitude of capex?

Disc :
Tracking position, evaluating for investment


(axiskumar) #509

As per latest Presentation Q120 new capacity will come with 130 % capacity increase…

I may be wrong with time…Please double check from your end whicch is avalable in web…


(HR) #510

I remember reading ICICI Sec research report which mentioned full capacity to come on stream in 4Q20


(Pratik--Patel9) #511

Looks like Pokarna might not be able to fully capitalize on 300% duty applied on Chinese import of Quartz products in USA. As per some research reports I read, the quartz division in Pokarna is already working on 100% utilization and new plant is expected to be commissioned by Q420 which is still far.
Pokarna is in really sweet spot these days but sadly it doesn’t seem like it will be able to utilize this great opportunity.


([email protected]) #512

hi all.any idea why ashish kacholia is selling. is there something fishy that we people are missing ??