Thanks. Didnt realize that.
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
Sharing my notes from Pokarna’s Q1FY19 concall. You can also read the transcript from here.
* 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.
Pokarna- all things are fine. But unless the capacity expansion happens, no growth.
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: