Carysil (earlier Acrysil) - Kitchen sinks


Carysil is yet to break its all time high volume in Quartz sinks

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Nov 2024(Q2-2025) concall summary

FUTURE GROWTH TRIGGERS

=We are quite positive that
we can achieve a 15% to 20% growth
next year.

1…EXPORT BUSINESS

A…Struggling european competitiors

=Our competition I said in the last earnings call, our all our competition is in Europe and they are really struggling with the cost aspect. So,
we have a lot of opportunities coming ahead

B…Higher margin products for US and europe businesses

= We have kind of substituted better margin products to the US from India and that has already helped the
last month profitability into green.

=So, this initiative of substituting the European products with
better gross margins from India is going to help the company move forward which is obviously
going to further help to expand once the volume expansion happens, the margin expansion will
also take place.

2…DOMESTIC BUSINESS

Revenue@29% growth

2021@65cr
2022@98cr
2023@130cr
2024@140cr

=The home improvement sector in india is probably the worst performing sector right now because of high
inflation and at a high interest cost. And in spite of this, our company has been able to post some great growths and able to sustain the margin.

=We are outperforming our peers considering the kind of demand

= This growth triggers are:

A…Dealer network

-expanding our dealer network from 1,500+ in FY21 to 3,500 in H1FY25

B…Gallaries
-increased galleries from 80 in FY21 to 95 in H1FY25

C…Premium products

= We believe that the overall
demand in the India retail market can be muted but the scope for Carysil because since it’s a premium product there has been a lot of traction for our products

D…BIS IMPLICATIONS

=Due to BIS, a lot of competition, especially the unorganized sector getting wiped off.

=So, any company which is going to able to manufacture great quality products, would be able to exceed
in technology capabilities is going to win. We are and we are probably one of those companies
who always believe in high quality goods. So, I think we are very confident moving forward that
this restriction is going to help us to kind of scrap out all these non-quality guys and then giving us an opportunity to enter the Indian market.

E…E commerce and electronic stores

= We are also focusing on the e-commerce line.

=We have started selling our kitchen appliances at electronic stores

3…QUARTZ SINKS

=I think we are expecting a good growth. The lifestyle products traction is improving, so we see that trend changing

=We are launching a complete new range of kitchen sink products which we are going to exhibit at the Ace Tech exhibition in Mumbai
November 14 to 17.

3…S.S KITCHEN SINKS

=We have reached 90% capacity

=We are already looking for a new place right now to expand the capacities. We are also putting a new investment in the PVD machine because there’s a lot of traction coming into that business. We are also starting the third shift in stainless steel which we’re not doing till now.
So, we will have to take a lot of new initiatives now moving forward to expand the stainlesssteel capacity

=But I think we are looking at least 200,000 sinks for next year, anyway 250000 sinks capacity in FY25-26 increased from 180000 Sink as of now

4…FAUCETS

=We recently expanded our faucet division with an additional 40,000 units, bringing our total capacity to 50,000 units p.s. .

=Strategically, we are working toward further increasing this capacity to 100,000 units p.a.

=Moving forward we are launching
about 20 new faucet models in the Ace Tech.

5…APPLIANCES

=Our appliance capacity
expansion of 100,000 units is now live, and we are already seeing a positive market response

=We’re launching a whole new line of smart built in appliances with some amazing features.

6…EXPECTED FEW DEALS

=In the last earnings call I did
mention that there were some few deals on the horizon which are going to get realised got delayed. We got some final audits happening this month in our company where it looks quite positive and I think that’s the reason we did go for QIP

=================
PERFORMANCE

1…DOMESTIC

=Our domestic business is improving, with H1FY25 revenue up by 14.1% to Rs 75.3 crore from Rs 65.9 crore in H1FY24.

2…EXPORT

A…At Carysil FZ-LLC which is our subsidiary based in UAE in the GCC market has strong demand
traction. We continue to see promising growth and believe this trend will expand significantly.

B…Operations in Turkey have commenced and we’re excited about this new initiative of brand
building Carysil and due to its high growth potential.

C…EUROPE

=The market in UK in stable, while Europe has begun to show signs of revival, monitoring the situation closely

= UK subsidiaries Carysil Products and Carysil Surfaces Limited
are progressing well and we continue to see it perform better.

D…USA

= Regarding the performance of overseas subsidiaries, United Granite LLC has experienced subdued demand due to local US factors
resulting in muted performance. However, we anticipate a turnaround the beginning of the FY25-26.

E…CAPACITY UTILIZATION

Quartz @63%
Stainless steel sinks @90%

F…Margin is lower due to
=Product mix and
=Raw material costs.
=Freight cost

Disc…invested since 2020-2021 with avg buy price of Rs 247

-Stock/net profit is in consolidation phase since last 3 yrs ,i think due to macro factors.

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Thanks for sharing this. The Management is positive for 15% to 20% growth, but growth has been muted for the last 4-5 quarters. Can we trust the undelivered management commentary, and what are the growth triggers for this business in the next two years?
Appreciate your views on this. Thanks,

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There is always problem with management like overpromosing and under delivering’s but we should also look another aspect of management but they have hunger to grow. By looking last 10 year i am confident with management with vision just they are not able to manage the timing

Thankyou Pragnesh sir for your insight but have you tried to though of KEY RISK of this business, i.e. schock or frankee opening plant in India then our company wont be having that advantage of labour cost.

Your points are valid
But i dont over analyse fundaments.

As per carysil management,

“The home improvement sector is probably the worst performing sector right now because of high
inflation and at a high interest cost. And in spite of this, our company has been able to post some great growths and able to sustain the margin”

A…For domestic business

If we see other indian comanies, hindware management has guided same about this industry

Now, lets see operating profit of various indian companies from 2022 to 2025ttm

Operating profit(2022-2025ttm)
-Cera 221cr /277 cr
-Kajaria@612 cr /670cr
-Hindware@176cr /199cr

While carysil has 29% domestic revenue growth
2021@65cr
2022@98cr
2023@130cr
2024@140cr

Carysil has really performed well as compared to other companies in real estate/home improvement sectors as both these industries will have parallel growth

B…International business

=Here, we all know global macro factors affecting usa and europe business.

=Carysil has operating profit (2022-2025 ttm)
@105cr /143cr@12% cagr growth in such adverse global macro economic

C…Interest and depreciation effects

=Interest and depreciation expense have made big dent on net profit

=Operating profit(2021-2025 ttm)
105cr /143cr@ 12% cagr growth

=Net profit(2021-2025)
65cr/64 cr@ flat growth

So, i think 15-20% growth target is perfect guidance by management.

Disc…invested

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