Carysil (earlier Acrysil) - Kitchen sinks

Kasfur_Dhuniyan · February 2, 2024, 5:26am

Carysil

Carysil Nearly after 2 years of Consolidation and 50% Correction stock has Shot up 100% up from the Bottom What Happened?

Company was Badly Impacted because Export Contributes 75% of the Business from Europe, UK and USA region i.e Political Issue and Holding 200000 Capacity expansion of Quartz Sink

Company has Given Guideline of 1000 Cr Revenue BY FY25 But I am Expecting It May Touch in FY26, Since I have been tracking managements Con Call they have been Always over estimating and Delivering Lower

Sink Capacity Doubled That is from 90K To 180K and Quartz Sink Capacity At 10L P.a

Company Fully Utilized existing Capacity expansion, So Company Acquired 60000 Sq.Mt for Future expansion

Acquisition & Cross Selling has always been in Company Favor through Earlier decision like 100% Stake in Homestyle ,Tickford,Tap Factory in Europe ,Uk Resulting in Growth of the Company gradually

Expanding to New Geography from Existing 55+ To 70 in Next 3 Years, As 75% of the Business Comes from Export, so going forward it will help in Top Line

Quartz Sink Contributing 46% of the Business and Currently At 60% Utilization and Guiding for 80% End of FY24 on new Customer Acquisition As Quartz sink in demand in India likely to go up due to luxury lifestyle and Real Estate Performing Well now and Expecting Rs 200 Cr Sales From Domestic Region From Current 100-120 Cr Sales

Company Done Recently Acquisition of Granite LLC as its one the fastest Growing Segment in Home Improvement Space Across the Region and this will Result in 120-130 Cr Top line at 90% Capacity Utilization

Company is Sable to Grow Market share from Competitor due to Quality and Cost of the Product in Europe

Stainless Sink Supply to IKEA Will commence from Q4FY24 Which been Already delay so we need to check on these too.

Company Distribution Network Jump From 1500+ to 3200 Pan India

Q3FY24 Will Update Soon

Mohit_Jariwala · February 7, 2024, 11:35am

Carysil Limited Q3 and 9 Months FY24 Earnings Conference Call February 01, 2024

Our focus on increasing capacity utilization in the quartz sinks category has been steady, with progress reaching 70% by the end of 9 months FY24 and expected to increase further on a quarter-on-quarter basis
We expanded our capacity by adding 90,000 units in the last quarter, bringing the total to 1,80,000 units. The demand in this segment remains strong, with capacity utilization of 67% of the quarter ended 31st December 2023
Our performance in the US and the UK market continues to be strong. The destocking process concluded and inventory is returning to its normal levels
We expect better operating margins in the coming quarters due to various actions taken by improvement in, material sourcing, and business expansion
Howdens is the Number 1 trade kitchen supplier in the UK. It has 750 depots. It has 27 granite
models. They sell 10,000 kitchen sinks per week. That’s 500,000 kitchens per annum. Their gross revenue is 3.3 billion pounds with approximately 20% EBITDA margins. That has been a great feather on the cap for our UK team. And we also have received the first order from them
It’s exciting to inform you that we have initiated the sale of appliances from our new manufacturing setup. By March 2024, our state-of-the-art facility, capable of producing 1 lakh units annually will be fully operational

Ashutosh_Tyagi · February 13, 2024, 4:36pm

The management has not clarified on the sharing of the cost for acquisitions done recently along with the plan to synergies the backend operations with these

The manpower cost has gone up significantly in absolute as well percentage to sales ? Any insight here please

Shanki_Bansal · February 14, 2024, 5:45am

As per recent investor con-call, management clarified that increase in employee cost is due to:

Company has hired new employees to cater their new customers under pipeline.
There is also the increment round which has happened in the current quarter.
On the quarter to quarter, it will stabilize and as a percentage it will go down from here.

hnk_so · February 14, 2024, 6:20am

Export market will not good in year 2024.

Points from Con call of POKARAN - “According to the latest National Kitchen & Bath Association of America report, kitchen and bath
revenues for Calendar 2024 are expected to fall by 3% year-over-year. New construction and
remodelling expenditures are also projected to decline by 4% and 2%, respectively, in 2024. Despite a
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recent increase, the supply of existing homes remains below a balanced market level, with
expectations of continuation until mortgage rates approach ~5%.”

ranvir · March 1, 2024, 2:41pm

Carysil ltd -

Q3 FY 24 results and concall highlights -

Revenues @ 188 vs 137cr, massive YoY jump of 37 pc
EBITDA @ 36 vs 25 cr ( margins @ 19 vs 18 pc )
PAT @ 15.3 vs 11.9 cr ( due higher tax outgo )

9M revenue split - geography wise -

Exports - 79 vs 78 pc YoY
Domestic - 21 vs 22 pc YoY

Product wise split of 9M revenues -

Quartz sinks - 50 vs 52 pc
Steel sinks - 11 vs 13 pc
Appliances - 11 vs 11 pc
Surfaces - 27 vs 25 pc

Company’s UK subsidiary - Carysil Products Ltd, clocked a 9M revenue run rate of 72 cr vs last yr’s 12 M run rate of 89 cr

EBITDA margins were adversely impacted due integration of United Granite LLC ( kitchen top fabrication company in USA ). From Q4, expect EBITDA margins to sustain at around 20 pc

Current Quartz sink capacity @ 10 lakh sinks/yr
Current Steel sink capacity @ 1.8 lakh sinks/yr

Company has opened 03 state of the art showrooms @ Mumbai, Gurugram, Ahmedabad - to showcase their full range of products including appliances

Company is trading and manufacturing ( some of them ) appliances like - Chimneys, Wine Chillers, Dish Washers, Hoods, Cook Tops, Microwave Owens, Built in Owens

Company’s current dealer network @ 3200, distribution network @ 85 in the domestic market

90 pc of company’s exports are on FoB basis. Hence the impact of Red Sea issue on company’s margins should be minimum

Company has tied up with the biggest retailer (ie Howdens UK ) of Kitchen Surfaces, Sinks, appliances, modular Kitchens etc in UK . They do an annual sales of > 25000 cr with an EBITDA margins of around 20 pc. They sell 10k Sinks / week. Company has received their first order from them. It’s a sizeable order !!!

Company’s new facility capable of manufacturing > 1 lakh Kitchen appliances / yr to be operational by end Mar 24

Commercial supply of SS sinks to IKEA to begin in Q4. Should be a reasonably good Qty

Q3 is generally a weak Qtr for the company due Christmas holidays. Q4 should see some sales and margins pick up

In India, company’s B2B business ( like selling directly to builders ) is looking encouraging. Confident of doing 200 cr topline from India business inside next 2 yrs. Hiring a lot of people in the B2B segment

Because of the Red Sea issue, the freight costs for the Chinese products have gone up even further. Its a kind of blessing for the company

The recent acquisition - United Granite LLC in US did a revenues of 15 cr in Q3. When acquired, this company was doing an EBITDA margins of around 10 pc

Company is bullish on its faucets and taps business. Compny’s products have received very good customer response. This business should also pick up going forward

Company’s guidance of 1000 cr topline may be achieved in FY 25 or latest by FY 26

Disc: had sold earlier at around 1100 levels. Have started buying again, biased, not SEBI registered

murali603 · March 15, 2024, 1:34pm

Carysil planning to raise funds through QIP//preferential issue

Atul_Desai · March 25, 2024, 11:37am

Its not good that they are doing a fund raise when capacities are not fully booked. Next year post US elections, expect that import taxes to be raised and a slow down to hit developed markets , give the severity of the rate rises and end of stimulus payments which is designed to give them a soft landing. that is not certain and any import duties will crash the world international trade including housing and such items. be careful. wait for next year before getting into this.

Hemant_Kumar2 · March 26, 2024, 8:20am

QIP is a bull market phenomenon. Companies prefer to do QIPs during bull market, when their stock prices are doing very well, for obvious reasons.

So we can’t really fault a company for doing QIP if they expect need for capital in the future and current market is favorable for QIP. May be company foresees capacities being fully utilized in next 3-4 years. Additional capacities require advance planning and one can’t start planning additional capacities after maxing out the existing ones (that will be sign of management not knowing how to run the company).

Plus QIP when done at higher valuations leads to lower equity dilution for every dollar raised.

Rest (US raising import tax, slowdown) is all speculation and if I were to really speculate I can come up with any scenario to create bull or bear case for any stock.

murali603 · March 27, 2024, 7:04pm

if everything goes well i think they will achieve max capacity utilization’s in next 2-3 quarters. They may resume previously halted quart sink capex after QIP.

Jitendra_Vyas · May 8, 2024, 2:29pm

What is reason behind sudden fall in Carysil on 8th May? Any insider news?

murali603 · May 9, 2024, 4:32pm

It fell by almost 25% from ATH, there might not be any specific reason valuations are almost stretched to the max extent. 55 P/E could be very high premium, now its down to ~40 P/E. I will look for their commentary on 1000Cr revenue goal by FY25 in the Q4 concal

KS16 · May 21, 2024, 9:12am

Q4 results, came on 20th, post market

https://www.bseindia.com/xml-data/corpfiling/AttachLive/b82bab44-574c-41d9-bb69-f80494c0835a.pdf

Investor presentation https://www.bseindia.com/xml-data/corpfiling/AttachLive/68e37ff9-a3c2-4f38-91a3-37def28062e3.pdf

It is a QnQ flat result and in this day of hyper expectation , YnY growth is not sufficient from the looks of it. Stock has tanked 5% as of now, today

PS - invested

amangoklani · May 21, 2024, 9:47am

I attended the con-call today. To me the management did not sound convincing with regards to its aspirational target of Rs. 1000 crore topline by FY25.

Key excerpts from the call,

For softness in Indian business, the management is hoping for better macro environment to bail them out. Upcoming monsoon, abating of heatwave, govt initiatives etc. will help growth in the future. They’ve also staffed up on the B2B side (including some senior hires) to help with sales in the Indian market.
They will continue to add distributors in the Indian market going forward as well.
The fund raise of Rs. 150 crores will be tapped into as and when needed for growth initiatives. Nothing firmed up as of now.
15-20% volume and value growth expected going forward. Management maintains its INR 1,000 crore topline target of FY25. However, it will come only with inorganic opportunities. Did the management ever mention this before? I don’t remember hearing this before. Without inorganic growth, the company maintains it guidance of the topline growing by 20% in FY25.
Ebitda margins will be maintained in the range of 18-20% in FY25
Higher other expenses in this quarter on account of, higher freight costs (1-2% additional cost), integration of United Granite (not one time in nature, all operational costs) and advertisement expenses.
There has been no impact of the Red Sea issue on the company’s revenue. No impact expected in Q1 either.
Receivable days have been impacted by the Red Sea issue. However it will come back to normal in the coming quarter.

Disc: Invested as a tactical 12-18 months bet. Not happy with the Q4 results or the guidance going forward. Will exit on the next bounce back (if any).

Hemant_Kumar2 · May 21, 2024, 11:12am

Thanks for sharing it. Your post draws attention to a lot of exciting management guidances floating around, these days, and Carysil’s case is a reminder of why one needs to take them with a pinch of salt than use them as investment thesis.

20% growth on top line is not bad and Carysil has been delivering this on a consistent basis (along with EPS) without any significant impact on return metrics. And with exports doing well I believe they should be able to operate in this growth range.

So if one ignored that (misguided) guidance of 1000 cr revenue by 2025, I find it a fairly good stock to own.

Disc- Used to own it before exiting. Looking to reenter it on some correction.

FIRE40 · May 21, 2024, 8:45pm

Gleaning from the Q1 and Q2 FY24 concalls I am inclined to conclude that the 1000 crs guidance was based on the acquisition of United Granite LLC, new products and new geography and not on further new acquisitions.
Q1FY24

Q2FY24

Disclosure: Invested and watching the trajectory for the next couple of quarters.

ADITYA_JHAVER · June 1, 2024, 8:14am

Carysil has done clear case of misguidance.

Q3 they had the conviction to scale to 1000cr stock rose up to 1100.

Some of the insiders sold at peak.

Now they are guiding of achieving 1000cr with inorganic acquisition,if at all it happens.

Always take guidance of aggressive commentary management with pinch of salt. Those who are tracking this company knows it very well.

rahil_sayta · June 1, 2024, 8:39am

Just an update post. Sold my holding in carysil post Q4 result. Valuation comfort not there and growth seem to be slow. Not too happy with acqusitions as a way of growing business. Looking at better opportunity with some.growth visibility .
May look at re enter at a convenient time

ranvir · June 2, 2024, 7:29am

Carysil -

Q4 and FY 24 concall and results highlights -

Q4 outcomes -

Sales - 191 vs 146 cr
EBITDA - 35 vs 26 cr ( margins @ 18 pc - flat YoY )
PAT - 16 vs 12 cr

FY 24 outcomes -

Sales - 684 vs 594 cr
EBITDA - 129 vs 110 cr ( margins @ 19 vs 18 pc )
PAT - 58 vs 53 cr ( due higher depreciation, interest costs and higher tax rates )
ROE @ 17.4 pc

Only company in Asia to manufacture Quartz Sinks. Current capacity @ 10 Lakh sinks / yr. Company makes 150 different sizes / designs of the same. 50 pc of company’s topline comes from Quartz Sinks segment. 28 pc of topline is contributed by the solid surfaces segment

Company’s steel sinks capacity @ 1.8 lakh sinks / yr. Company only caters to the premium segment. SS sinks contribute to 11 pc of topline

10 pc of topline contribution comes from selling Kitchen appliances ( Company also makes some of them, and trades in others )

India business growth for FY 24 was tepid @ 6 pc. This is an industry wide phenomenon ( ie building materials Industry ). Aim to grow by 15-20 pc in FY25. Company’s focus remains the luxury and premium products. To keep pursuing the B2B segment - ie directly selling to builders

Company is planning to raise upto 150 cr via QIP

UK contributes to 30 pc of company’s topline. Getting good orders from Howdens UK ( a big - organised retailer )

Exports : Domestic sales breakup @ 80 : 20. All of India sales are recorded under company’s brand - Carysil. Only 20 pc of export sales are under company’s brand name. Aim to take this up to 30 pc in the medium term

Higher freight costs due Red Sea crisis impacted the EBITDA margins by 100-150 bps in Q4

Company is guiding for 20 pc organic growth + 150 cr topline kind of Inorganic acquisition to meet their 1000 cr topline guidance for FY 25

Avg realisation / Quartz sink is around Rs 5500. For steel sink, its around Rs 4200

Disc: hold a tracking position, biased, not SEBI registered

axsubram · June 24, 2024, 8:46am

The debt increase is a concern for me.

303Cr debt in this fin year. Any inputs/ information on this ? or their history of managing debt?

thanks in advance

Disclosure: No holdings. Interested/watching as proxy for real estate theme