Acrysil - Kitchen sinks

Completely agree here. My limited point here is that even in the recessionary environment that is being expected, IKEA seems to be comfortable with the demand for quarzt sinks.

Also, it would really help if the management gives out clearly the kind of volumes they are doing with IKEA.

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Their partnership with IKEA has evolved and management shared in confcall as well
Management expected more and more business from IKEA and this notification comes

So this notification is on the lines of walk the talk
Expecting more positive news this year for company with capex coming online
and on domestic sales improvement as well

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It’s not necessary that Ikea in general is bullish on Quartz sinks. They might be just maintaining their inventory but shifting sourcing from one player to another (low cost moat for Acrysil) and reducing cost.

It’s good for Acrysil indeed. The volumes though are still quite low and I don’t read much into it beyond this.

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Acrysil commenced production of additional 160,000 units of Quartz sink at Bhavnagar plant.
Total manufacturing capacity of Quartz sinks have increased from 840,000 units to 1,000,000 units per year.

Discl: Exited, holding only tracking quantity

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I have some anti-thesis for Acrysil which are stopping me from investing in it

  1. Premium products, with high prices, should have high gross margins (Low margin + Low turnover)

  2. Future core business (Quartz sinks) growth depends on the foreign markets and majorly on big brands like GROHE and IKEA - which make topline concentrated

  3. A huge unorganized market in the same business. Many different types of Quartz sinks is available in the market. Acrysil has the technology and quality advantage but many times quality doesn’t matter if one can get normal brand sink of Quartz in 3k while Acrysil sinks are available at 5k-6k

  4. They still don’t have a builder network in India which can lead to bulk orders of quartz or steel sinks

  5. They are highly focused on their new brand, which has not contributed till now on their topline

2 Likes

I have some anti-thesis for Acrysil which are stopping me from investing in it

  1. Premium products, with high prices, should have high gross margins (Low margin + Low turnover)

  2. Future core business (Quartz sinks) growth depends on the foreign markets and majorly on big brands like GROHE and IKEA - which make topline concentrated

  3. A huge unorganized market in the same business. Many different types of Quartz sinks is available in the market. Acrysil has the technology and quality advantage but many times quality doesn’t matter if one can get a normal brand sink of Quartz in 3k while Acrysil sinks are available at 5k-6k

  4. They still don’t have a builder network in India which can lead to bulk orders of quartz or steel sinks

  5. They are highly focused on their new brand, which has not contributed till now on their topline

2 Likes