Carysil (earlier Acrysil) - Kitchen sinks

Thanks fr d update. Has d mgmt delivered to its past promises?

Disclosure: initiated tracking posn nd plan to add more on dips

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In the previous post in this thread back in 2014 times, where there is mention of management targetting 1000cr sales by 2020… Now they target 1000cr by next 10 to 12years…so targets are lagging… But they have delivered commendable performance in the past… a 23.78% cagr growth in the topline in the past 6years…
Considering present commentary,
14.35 to 17.46%cagr growth projection in topline the next 10 to 12years, is achieveable…
And they have consistently incremented their flagship quartz sink capacity, in the past…
This year also they are targetting to increase quartz sink capacity by 6 to 12percent …
Also the growth is expected to pick up from sternhagen and appliance business, not to write off the premium quadro sink, whose capacity has been enhanced in q3 to double and they typically maintain 100percent capacity there…
My expectations from them is not only over 20percent growth in topline, but also significant margin appreciation for this fy… For this , the growth driver should be sternhagen handsdown, where not only the margin is high but also new launch in the uk market… With these maturing in fy20, along with the incremental quartz capacity, 3d.concrete.tiles… Next fy should be the game changing year for the company…

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https://www.bseindia.com/xml-data/corpfiling/AttachLive/0f7e8e55-c897-4015-a039-ae741826d817.pdf

CApex- 10cr
Capacity hike- from 4lakh sinks/pa to 5lakh sinks/pa
segment-quartz sinks
current capacity utilization- 83% [332000 sinks pa]
Post capex- 66.4%

commentary- “The demand for Quartz Sinks has been growing exponentially. Based on the current order book and expected
future orders, we have decided to expand our production capacity at our existing plant in Bhavnagar (Gujarat)
by further ~25%."

Capital infusion into equity by promoters- 8.5cr
So 1.5cr is the expected debt to be taken…
total debt fy18 ending- 81cr
D/E ratio-0.7
[management has guided to maintain de ratio within 0.8 to 1, for the next few years]

History of capacity addition in quartz segment …
Untitled

This time has been the largest jump in the capacity addition in the past 7 years…

The CO mentioned the incremental capacity to be coming online in the later half of the year, so again, how much will this capacity get absorbed this year is a matter of question mark…
Although he was inaccurate about the capacity addition number back then, but still better to give the benefit of doubt…

Quartz capex + Sternhagen launch in Uk from Q2 onwards + 3d concrete tiles to start marketing - fy20 seems to be an important year for acrysil, with some much of activity culminating this year end…

Disclaimer… completed accumulation yesterday

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Q1 financial notes…

operational topline growth- 30.66% yoy and 18.87% qoq

EBITDA- 808.26L [growth yoy-19.85% and growth qoq- 49.31% ]

EBITDA adjusted with forex loss/gain-
growth is 38.63% yoy and 64.6% qoq

PAT growth yoy 16.66% and qoq is 77.14%

Ebitda margin- 13.42% (q1 fy19) ,
14.1% (q1fy18) ,
13.84(q2fy18)
9.39%(q3fy18) ,
10.6%(q4fy18)
11.9%(fy18 annual)

the current ebitda margin is maintained from 14.1% to 13.42% , with a parallel inflation of cost of raw material by 40.39% and additional forex loss of 125.17L in q1fy19 from a gain of 1L in q1fy18…
NO wonder margins got hit in q3 and q4, but essentially they are back on track with the business…
EBITA to sales- 0.14 in q1fy19 compared to 0.12 full year fy18

the other expenditure has been the highest in the past 6 quarters , up 13% since the last quarter… if there is a presence of some one off item there, to be verified in the concall , which might have been incurred while doing the capacity hike…

the growth in the stand alone business was 35% yoy and 17% qoq
ebitda margin stands at 14.2% for q1fy19 vs 13.42% for the consol ebitda
the subsidiaries clocked 9.14% ebitda only…

what is most surprising is some gearshift happened in the business for sure this time…
the standalone ebitda[specially] and topline have jumped up a lot , while the subsidiary ebitda degrew by a huge amount! , the subsidary ebitda margins are at a record low and with this degrown ebitda and margin , there has been a growth in the subsudiary business …
to explain in numbers,
here is my PnL breakup spreadsheet …
Q1 acrysil.pdf (421.0 KB)

the subsidiaries companies are the following taken together…
Acrysil Appliances Limited
Acrysil GmbH - Germany
AcrysilSteelLimited
Acrysil UK Limited - United Kingdom
Homestyle Products Limited - United Kingdom
Sternhagen Bath Private Limited

SO the sink division took the hugely lagging subsidiaries and closed the quarter with good number…
so 2 things from here…

  1. what drove the margins and the topline in the standalone business all of a sudden in this quarter? a 90.5% ebitda growth and a complete turnaround of margins from 8.56% to 14.2% compared to q4fy18!

  2. what happened to the subsidiary business which enjoys 18 to 22 percent margin , suddenly dropped to 9.14% !

in relation to question 1…
the probable things might be as the company mentioned in the concall previously…

so some imput price seems to have been passed on to the customers definitely …
but then again, when they guided for the advertising expenses to be lesser from this fy, why is the other expense high in this quarter…

and i wonder , when a depreciated rupee state can jump up the forex loss on finance cost by 5x qoq,{in the consolidated numbers} , but the loss seems to have decreased in the standalone numbers qoq, so the depreciated rupee might not be a factor here and the same appreciated dollar state might not have played much aiding the topline and margins, in the standalone numbers… another thing to be clarified from the management…

the PnL statement…
https://www.bseindia.com/xml-data/corpfiling/AttachLive/b267493d-f929-4530-97e2-6013c0c0e0e4.pdf

To me, the management has walked the talk and failed again at the same time… the guidance for the bath segment was still optimistic in the q4 call, Ashish kacholia had a disappointed sense during the call when the under performance of sternhagen was highlighted…
it has been 4 quarters, since the street has been expecting traction from the subsidiaries, nothing on it yet and i am kind of disappointed to see the subsidiary under perform as a whole… they did mention they will focus on grabbing form topline and volume from the appliance business and would include combo offers etc, that might have weighed down the earning and margin compared to topline inspite of the growth of later…

But the cyclical play in the sink business seems to be playing out nicely…

if the subsidiary contribute to the ebitda gradually , the outlook would be exciting…

the management guided for a ebita margin of 16percent for the full year and a topline growth of 20percent…
if q1 runrate can be maintained the earnings growth should be near about 40percent, beating the guidance by a good amount…

disclaimer… invested , and averaging

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Good Results. Topline up about 20% YoY and PAT up about 40%

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Good result by acrysil.

Disc - invested

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Split FV-10 to FV-2.

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Here is a recent report on the overall sink industry which covers all major global manufacturers including Acrysil.
https://www.millioninsights.com/industry-reports/kitchen-sinks-market

I have requested for report sample in the above link but haven’t received it yet. If anyone by chance had already read the report, please share the summary it.

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Good quarter as well as a good year for Acrysil

Standalone revenue has increased ~17% in Q4
Consolidated revenue has increased ~26% in Q4
Standalone Profit has increased ~34% in Q4
Consolidated Profit has increased ~72% in Q4 (UK acquisitions must be doing well as forex of pound is steady in Q4, sales figures are not available yet)

Standalone revenue has increased ~26% in 2019
Consolidated revenue has increased ~26% in 2019
Standalone Profit has increased ~83% in 2019
Consolidated Profit has increased ~44% in 2019

Dividend of Rs 1.2 (60%) has been recommended.

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New ADD petition in USA potentially affecting Acrysil as well. Not sure what would be the impact for Acrysil though, certainly not a positive one.

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Carysil is a non existent brand in usa. It has good share in UK market.

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Con call updates

2019 stats

  • Granite sink revenue is 166.5 Cr for 345000 sinks. Capacity is fully utilized
  • Stainless sink revenue is 22 Cr for 55600 sinks. Quadro sink capacity is fully utilized and Pressed sink capacity is 70% utilized
  • Appliances revenue is 16Cr for 18300 units
  • Food waste dispenser revenue is 1.2 Cr for 2022 units
  • Bathroom segment revenue is 5Cr.

2020 plans

  • Granite sink expansion is expected to complete by Q2 which will take production to 500K.
  • Quadro sink production will be increased by 20% to 30% by adding a second shift work.
  • Quadro sink production will also be expanded by 100% to 50K units.
  • Indian sales team is rejigged to increase domestic sales.
  • Based on Granite sink numbers on Q3 another 100K units expansion will be planned.

Other key updates

  • Company sees Chinese trade war as an opportunity.
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Hello shivaram thank you for sharing useful details.can you guide us what will be sales figure after completion of expansion and minimum sustainable net profit margin.thank you in advance.

It depends on sale. As the new capacity exhausts, they shall increase it again. Major jump should come appliances, bathroom segment. After achieving a certain volume and profits, they can spend on advertisement to boost sale. Normally on full capacity utilization, sale should be 33% up.

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If they successfully complete the expansion by Q2 and fully utilize the capacity like now, they will get an additional revenue of 25Cr and NetProfit of 4Cr in FY19 to FY20 just from the Granite sinks segment alone which is roughly 24% profit growth. Any delay would impact this numbers.

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Excellent Q1 results!!

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Did anyone get chance to attend Conference Call held on October 9th? The transcript has not been uploaded on the website yet.

Also, company has announced a preferential allotment to promoters.

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Results declared, looks ok superficially.

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