I dont think this is bad news for acrysil. Keep in mind, that inventory is still very low due to supply issue. Acrysil products are available with Home depot and Lowes too, this indicates that their distribution network is expanding.
Dic: Invested.
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Acrysil quartz sink capex seems to be very well factored in the price . Whatās need to be seen is how the management gets into faucet business and plans going ahead.
The management call will give us more clarity ahead.
As of now they seem to be growing well further growth triggers needs to be watched.
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Acrysil acquires tickford orange limited in UK.
It has 3 brands Maia Metis and Minerva.
Preliminary Google search looks like they are into kitchen top . It will also open up market for acrysil to sell their product under their brand name .
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They are in faucet business for many years but this doesnāt seems to be picking up. One reason may be that they are quite busy in fulfilling the risiing demand of kitchen sink. Another reason may be that faucet business is quite competitive and it will be hard to get good margin in this business if you are not holding a premium brand. Penetration of Acrysil brand is quilte low till now. They are trying hard to increase the penetration in Indian market. Recently they signed Vani Kapoor for brand promotion. Still there is long way to go in respect of faucet. We have to see how it is progressing.
Disc: Invested
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They have two faucet plays -
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In q2 22 call, he mentioned that he plans to sell faucet along with the sink. Also wanted to offer flexible faucets. This will increase average order value significantly if they can bundle sink and faucetā¦
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The other faucet/ bathroom business is an allied play.
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My understanding is their focus has always been till now into sink . ( Their capex shows that ) they were also successful in that line so they kept expanding their business.
They steadily built other products under their umbrella.
Their product line is much more into kitchen utilities but they donāt have a brand advantage there. There are many players in the industry with a advantage of a brand.
Acrysil always believes in Quality products. What I understand is their cashflow now has been slowly rising and they will look at expanding into different product lines and build a brand in kitchenware and faucet. Vani Kapoor is one such step.
Next few years will be interesting to see how they can scale.
Discl - Invested
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Also Sussane Khan collection.
Sussane khan also has her own design showroom where she sells acrysil products.
Learnt she has helped them get B2B contracts where she has design assignments.
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Audio recording of call held yesterday on the acquisition
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So Acrysil managed to buy Tickford Orange at about 11 million GBP. Thatās like <1x Sales and <7x P/E. Was it sort of a distress sale on behalf of Tickford? How could Acrysil bag such a steal deal for a consumer facing business in good markets?
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Yes. It is an excellent buy. While, on standalone basis, STL looks good, but, more importantly, it opens a vast playground of worktops & tabletops to Acrysil which can be offered through their major channels like IKEA, Grohe and other major large format channels.
This can be offered to customer as standalone or an intergrated āworktop+sink+ faucetā bundle. This will increase their wallet share as customer gets a ln integrated and hastle free one stop solution.
In india also this bundled package should find ready takers.
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Few bullet points on recent acquisition:
ā¢ Co. had Quartz Sink manufacturing capacity of 8,40,000. Further the 360,000 sinks addition in capacity which is going to be in two parts 180,000 each is going to be completed in Q1 and Q2, respectively.
ā¢ Acrysil UK Limited which is a wholly owned subsidiary of Acrysil limited has agreed to acquire 100% shares of Tickford Orange Limited, UK along with its wholly owned operating subsidiary Sylmar Technology Limited (STL)., UK. It is a manufacturer and customizer of high-quality solid surface products for kitchen and bathroom segment. These products are used for both domestic and commercial purposes catering to the markets across United Kingdom.
ā¢ STL is a leading player in the UK solid surface market with an estimated market share of 35%. It generates 80% of its revenue from sale of kitchen products and remaining from bathroom and marine related products which are yacht.
. STL had three brands under its banner namely Maia, Minerva and Metis
ā¢ As of CY2021 STL has reported revenues of Ā£12 million and for CY2020 it was Ā£11 million. Although CY2020 was impacted by COVID-19 STL has been profitable.
ā¢ Acrysil UK will acquire 100% equity shares of a total consideration of Ā£11 million out of which Ā£7.7 million is the debt and Ā£3.3 million is internal accruals.
ā¢ Acquired Company has longstanding customer base like Selco, Homebase, Hafele, Magnet, Moores, Fairline, etc.
ā¢ Acquisition will open up cross-selling opportunities for the company.
ā¢ STL has an outstanding reputation in the market and has been sourcing and manufacturing solid surface product for 35 years.
ā¢ STL had an EBITDA margin around 15% to 16%. Acrysil will take more initiatives to improve the margins further.
ā¢ Synergies Acrysil will get by this Acquisition:
o Co will get access to the large customer base of STL, which will allow it to significantly grow the biz of Acrysil Products Limited.
o Acquisition will enable the co entry into worktop market . company do have plans to introduce quartz tops and use these channels to significantly improve sales.
o In bathroom category Co was never entered in the UK market. By using these channels, it will launch the bathroom products in UK.
ā¢ Management expects by this year STL will get back to the pre covid level of sale viz Ā£14 million level.
ā¢ Through this acquisition co is confident of doubling its whole UK biz in next 4-5 yrs.
ā¢ Presently STL is utilizing 65% to 70% capacity. There is a significant land which is available next to it and which provide enough room for expansion further into the solid surfaces and also have the place to even to do the fabrication for the quartz top surfaces.
Uploading the Transcript of the meet
Acrysil_Meet.pdf (1.1 MB)
Disc: Invested. This is not a buy or sell recommendation.
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IC from Equirus.
Fy23 Rev/ Net Profit: 680 Cr/88 Cr
Fy24 Rev/ Net Profit:750 Cr/ 97.5Cr
Assuming Net Profit Margins remain between 13-14%
(Note: This is prior to Tickford Orange Acquisition)
Acrysil IC Note.pdf (2.0 MB)
I have a couple of questions:
- Why does a customer prefer Quartz over Steel sink ? or Vice-versa
- Will steel sinks retain maintain market share when the steel prices cool off in the future?
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Primary reason is Aesthetics . The market shifted from Ceramic to Steel and finally Quartz kitchen sinks. These are scratch proof , available in many colours ( to match the kitchen colour of the individual) and slowly the preference is shifting to quartz / granite sinks. Please go up this thread and you will find various posts on advantages of quartz sinks including some videos . If you are interested further, please go to the company web site and the photographs on display will make it clear why the preference is shifting.
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One of the key reason for going after Quartz is the high decibel metallic āsoundsā which Steel sinks make (contact noise with utensils) while Quartz are silent. Ofcourse other main reasons are Aesthetics, granite feel, longevity etc.
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I think they look better and goes well with new kitchen . Ideally replacing sink comes mostly when you do up entire kitchen . Overall cost in of sink in making whole kitchen is not that high so people tend to prefer a good looking Quartz sink . Also people match the color with the overall look . so its also more to do with overall look and feel + the benefits that it offers.
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Any particular reason for the thrashing today?
It is Quartz. These sinks are made of Composite material (Quartz + Arcylic) & often called Granite Composite as Quartz looks like granite. It is often 80% Quartz.
Below link from menards website. You can filter under Sink Material āGranite Compositeā you will see all Quatz sinks.
https://www.menards.com/main/kitchen/kitchen-sinks/drop-in-kitchen-sink/c-1524576222146.htm
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Did you see any Acrysil Quartz sinks at Menards? If so can you share the link/screenshot ? Are they using Carysil as brand name ?
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Quarterly results are outā¦ street seems to be disappointed. Guys who follow this stock for some time can comment on the results
Disclosure - tracking position.
Results are good but margins have come down slightly. In such turbulent markets, one small miss and you are taken down. Plus the overhang of rising US mortgage rates and rising interest rates (negative for housing sector and Acrysil in general)
I believe market is taking it down to a decent level of valuation of 25-30x pe. The story remains intact though (ConCall should provide some insights) and hence it might bw a good time to add on dips.
Disc: Invested from lower levels. Will add on dips from here
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