Sirca Paints India Limited

[prateek22]

Sirca Paints India Limited

Sirca Paints India Limited is a leading manufacturer and supplier of wood coatings, industrial coatings, and decorative paints based in India. The company was established in 2006 and has since then become a household name in the Indian paint industry.

Sirca’s products are known for their high quality, durability, and eco-friendliness. The company has a state-of-the-art manufacturing facility that is equipped with the latest technology and machinery. They have a team of highly skilled professionals who work tirelessly to deliver innovative and sustainable solutions to their customers.

Sirca offers a wide range of products that cater to various segments of the market. Their wood coatings are highly popular among furniture manufacturers, interior designers, and architects. The company’s industrial coatings are used in various industries such as automotive, aerospace, and construction. Sirca’s decorative paints are known for their vibrant colors and smooth finish, making them a popular choice for residential and commercial projects.

Sirca Paints India Limited is committed to sustainability and has implemented various initiatives to reduce their carbon footprint. They have also launched several eco-friendly products that are free from harmful chemicals and VOCs.

In conclusion, Sirca Paints India Limited is a reputable company that has earned the trust of its customers through its commitment to quality, innovation, and sustainability. Their products are widely used and appreciated in the Indian market, and they continue to strive towards excellence in everything they do.

• Sirca Paints India Limited primarily focuses on wood coatings, industrial coatings, and decorative paints. While Asian Paints is a major player in the decorative paints segment, Sirca’s specialization in wood coatings and industrial coatings may differentiate its offerings from Asian Paints’ product portfolio.
• As a general understanding, Sirca Paints India Limited is likely to have a presence in key industrial and commercial centers across different regions of India, including metropolitan areas and industrial clusters. These may include cities such as Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Pune, Hyderabad, and other major urban centers where there is a concentration of manufacturing, construction, and industrial activities.
• Sirca Paints derives a significant portion of its revenue from wood coatings. In the financial year 2022-23, wood coatings accounted for 44% of Sirca Paints’ total revenue. This is in contrast to Asian Paints, which derives only 12% of its revenue from wood coatings.
• Another difference between Sirca Paints and Asian Paints is their geographic reach. Sirca Paints is more focused on the eastern and southern parts of India, while Asian Paints has a nationwide presence. This is because Sirca Paints is a relatively newer company, and it is still in the process of expanding its geographic reach.

Concall Highlights

• Sirca Paints India reported a top line of INR268 crores in FY '23, a growth of 34% over the previous year.
• Revenue from operations were INR68.27 crores in Q4 FY '23, registering a 26% growth YoY and 5% QoQ.
• EBITDA margins for Q4 FY '23 stood at 19.2%, compared to 21.6% in Q3 and 17.4% in Q4 FY '20.
• PAT for the quarter stood at INR9.49 crores, an increase of 53% year-over-year and 10% quarter-over-quarter.
• For the full financial year, the company reported a higher ever top line of INR267.75 crores, a significant increase of 34% year-over-year.
• While EBITDA margins for the year stood at 23.05%, higher than previous year’s 18.9%.
• Net profit for the year stood at INR46.11 crores, a substantial increase of 66% over the previous year.
• The company has launched OIKOS, a luxury category product in the decorative paints segment.
• OIKOS is positioned as a niche product, but it is expected to help create the brand Sirca a popular brand for wall coating.
• The company has also acquired the rights to manufacture 10 different polyurethane wood coating products in India.
• This will allow the company to cut down its import bill, optimize its inventory days of finished goods, increase its manufacturing in India and strengthen its operations on pan-India basis.
• The company has also launched a new water based days coating range, D’Aqua PU.
• D’Aqua PU is a safer to use in children furnitures since it contains almost no volatile object content and emits no odor because of its water-based properties.
• The company is confident of continuing its growth momentum in the coming quarters.

Here are some of the key questions and answers from the concall:

• Q: How do you plan to differentiate yourself from the rest in the decorative paints space?
• A: The company is planning to launch a number of innovative products, including texture paints and solid paints with 200% more coverage.
• Q: What is the current capacity utilization and how much sales can be generated with full capacity utilization?
• A: The current capacity utilization is around 75%. With full capacity utilization, the company can generate sales of around INR350 crores.

Overall, the concall was positive and the company is confident of continuing its growth momentum in the coming quarters.

Downside

Sirca Paints is a well-established company with a strong track record of growth. However, there are some potential downsides to investing in the company, including:

• The company’s high valuation: Sirca Paints’ P/E ratio is currently around 41, which is considered to be high. This means that investors are paying a premium for the company’s stock, and the stock price could be volatile if the company’s earnings do not meet expectations.
• The cyclical nature of the paint industry: The paint industry is cyclical, meaning that demand for paint tends to fluctuate with the economy. This could impact Sirca Paints’ revenue and earnings if the economy enters a recession.
• Competition: The Indian paint market is a competitive market, and Sirca Paints faces competition from a number of other well-established companies. This could make it difficult for the company to maintain its market share.

Overall, Sirca Paints is a good company with a strong track record of growth. However, there are some potential downsides to investing in the company, and investors should carefully consider these factors before making a decision.

Here are some additional risks to consider before investing in Sirca Paints:

• Regulatory changes: The paint industry is subject to a number of regulations, and changes in these regulations could impact Sirca Paints’ business.

• New product development: The paint industry is constantly evolving, and Sirca Paints needs to continue to develop new products in order to stay ahead of the competition.

• Foreign exchange risk: Sirca Paints imports some of its raw materials, and changes in the foreign exchange rate could impact the company’s costs.

• Expansion of the company’s manufacturing capacity: Sirca Paints is planning to expand its manufacturing capacity by 20% in the next two years. This will be done by adding new production lines at the company’s existing manufacturing facilities.

• Investment in new product development: Sirca Paints is also planning to invest in new product development. This includes developing new products for the company’s existing segments, as well as entering new segments.

• Expansion into new markets: Sirca Paints is also planning to expand into new markets, both domestically and internationally. This includes entering new countries and increasing the company’s presence in existing markets.

The total capex for these projects is estimated to be around INR 100 crores. The company plans to finance these projects through a combination of debt and equity.

Why the OPM of Asian Paints is higher than Sirca Paints?

There are a few reasons why the operating margin of Asian Paints is higher than Sirca Paints.

• Scale: Asian Paints is a much larger company than Sirca Paints. This means that Asian Paints has a larger economy of scale, which allows it to purchase raw materials at a lower cost. Asian Paints also has a larger distribution network, which allows it to reach more customers.
• Brand equity: Asian Paints is a more well-known brand than Sirca Paints. This means that Asian Paints can charge a premium for its products. Asian Paints also has a strong reputation for quality, which allows it to command a higher price.
• Product mix: Asian Paints has a wider product mix than Sirca Paints. This means that Asian Paints is able to generate more revenue from each customer. Asian Paints also has a stronger presence in the premium segment of the market, which allows it to generate higher margins.

In addition to these factors, it is also important to consider the cyclical nature of the paint industry. As mentioned earlier, demand for paint tends to fluctuate with the economy. This means that operating margins for paint companies can be volatile. However, Asian Paints has a track record of maintaining high operating margins, even during periods of economic downturn.

Region

Sirca Paints mainly operates in India, but it also exports its products to neighboring countries such as Nepal, Bangladesh, and Sri Lanka. The company has a strong presence in the Indian market, and it is one of the leading brands in the wood coatings and paints industry.

Sirca Paints is planning to expand its international operations in the coming years. The company is targeting countries in Southeast Asia, the Middle East, and Africa. The company believes that there is a growing demand for its products in these regions, and it is well-positioned to capitalize on this growth.

Here are some of the countries where Sirca Paints operates:

• India
• Nepal
• Bangladesh
• Sri Lanka
• Southeast Asia
• Middle East
• Africa

The company is also planning to enter new markets in the future. These markets include China, the United States, and Europe.

[Nitin_Nimkar]

https://www.financialexpress.com/business/brandwagon-sirca-paints-launched-tv-commercials-sirca-hai-to-shaan-hai-featuring-manoj-pahwa-3167894/lite/

[sameernics]

Finally, the management is walking the talk. I remember them mentioning aggressive ad campaigns to penetrate deep across other markets. So, I expect ad spends to go up a little high, however to be compensated with other cost saving initiatives such as backward integration of resins.

[sameernics]

Latest from the AR.

[Souresh_Pal]

Manufacturing Italian imported products could have increased the margins. but management is using that miney saved in advertising spend. also they have operating leverage available but they are using thay money to advertising. surely management is long term view oriented. these 2 factors could have increased the PAT like crazy but they chose to use it in advertisement. which is nothing but investing for future.
Disclosure: Invested.

[hitesh_gangwani]

Hi Guys ,

Sirca Has Given achieved 26 % in my portfolio ( 19% achieved in my portfolio)

Achieved Rule of 72 in year 1
Buy date Oct 22

Considering year 1 - Oct 22 - Aug 22

Next Target for Sirca is 488 as I am calculating 26% from current market price 380

Reason for this calculation I want to have clear vision for my portfolio and my stocks

Sirca showed weakness for long time

Technno - Funda analysis for Sirca will be best for current scenario and seeing competitive scenarios head
( we can ignore technical analysis if Sirca becomes again strongly bullish in fundamentals)

All Positive News can be validated seeing charts and candles in the charts

Technical analysis

370 Can be treated as supports

Expecting Sirca to trade between 370 to 415 in sideway scenario

Expecting Sirca to hold 370 levels and Breakout 415 in coming 2 3 quarters

Break and hold 488 or 470 for portfolio target and holding Sirca for year 2

Pls also be ready for testing 345 level in bearish scenario

Please note I am not selling Sirca even if technical fails ( bcoz we are long term for fundamental play )
If stock falls , we should find reasons for failures
and do our homework

Nowadays promoters trust and their play in business is giving me 70% trust only in many companies
( 20-30% negative affects company and stock growth sometimes for temporary period)

So it is time to be little technical also so to bring edge to investors also by doing this

Never found fundamental Reason to Sirca to Run from 300 to 393 , to be honest

Never mind , I m happy with hard work done in averaging and holding period and achieved 26%

Target for year 2 - 488
Target for year 3 - 615

Both target are set as per rule of 72

615 will be tough for Sirca let see how fundamentals plays

For next year , I have decided to study about wood coating and wall painting products raw materials , other materials used for manufacturing paints and study in detail about it

Note : - I am not sebi registered analyst and not pro technical person just presenting my view

Do your own research before investing

Discl : invested

[hitesh_gangwani]

Also Heard Asian Paints Concall

I think Asian paints is becoming monster in paint industry and capturing and holding market share

They have already diversified in home decors , interiors and other stuff ( 4-8 different lines and services )

As per Li Lu , investors should think as he is running. Business himself

I Can see myself after Sirca is Maxed out in development of wood coating paints after 10 - 15 years

They Need to Start diversifying in these lines where Asian paints is already started diversifying

Sirca has done wall paintings , but it wouldn’t be enough to maintain margins at that future time

Sirca promoters need to enter in home decors and interior stuff once is wood coating is becoming. Stable or maxed out from wood coating

(Just my thoughts)

[sameernics]

Sirca has a good presence and leadership in coatings particularly in North India, which I believe even big boys tried and failed to establish vs Sirca’s Italian quality. Therefore, Sirca remained a preferred choice as far as wood and other coatings is concerned. Now they have decided to aggressively enter other markets, which I think they will succeed given their track record. The management in the past indicated that, their primary line of business would be coatings, while wall paints, putty and adhesives are like just add-ons, selling through the same channel without much increase in costs.

On the other hand paint segment is already getting crowded with big boys and there are other big ones lined up to enter the market with huge capex. So I see a big competition in the paint segment in the next 2 to 3 years. Probably Sirca’s management is aware of this and hence their main focus remained coatings instead of paints. This is the main differentiating factor of Sirca Vs others.

Now good thing is, Sirca gradually transforming into a full fledged manufacturer from being a trader. It has already announced that it will manufacture a number of Italian SKUs in India now. Plus it will manufacture resins in-house. A month ago, the company has released 2 tv commercial ads. https://www.youtube.com/watch?v=Ow0_xHDEEeU&ab_channel=SircaPaints https://www.youtube.com/watch?v=F3DvBANvRX8&ab_channel=SircaPaints
All these initiatives will give them operational leverage as well as improvement in financial metrics.

Disc: Biased and Invested at very lower levels.

[Souresh_Pal]

This is how I see it. Q1 and Q2 is peak quarters for sirca. Compared to q3 and q4. the stock made a short term top in December before the weak quarters. Now again heading towards new ath before best quarters.

Disclosure: Invested from 265.

[hitesh_gangwani]

@sameernics @Souresh_Pal

Hope u both Guys are rights

Stock ran from 600 to 800 and again showing 600 levels , (pre -bonus time) weakness for some weeks got me panic to do my homework at that time

I checked russia Sirca paint’s website , and America Sirca paints website

All had Similar low views on the social media like Sirca ( 2 months back)

After your reply yesterday , I again researched on the internet for long period

1. Yes , Sirca paints has product moat and good quality

According to me , Sirca is lacking of a person who advertise Sirca in great way ( advertising manager or brand manager or something )

It not about one advertising campaign but Lack of advertising manager / brand manager

In my thoughts post , @sameernics i m telling after 10- 15 years , company is completedmanufacturing in india and doing consistent sales , stable company , when there is less room to left in wood coating market , everyone has built their own market

Even Rajratan Global wire has Lower their margins To capture Thailand markets

Indigo and ica pdilte and other companies is giving tough competition to Sirca ,

1. Will Sirca will be able to maintain same margins , ( I m thinking after 10-15 years , not current 2-3 years margin)

2. Once company becomes small to stable mid cap ,
   Margin will fall as general expectation ,

3. When company is in developed stage after 10-15 years , companies will need to do what currently Asian paints is doing that is my thoughts

If you walk on the any household , ask about Sirca paints or what is wood coating ( they will know nothing) , only future will tell how these market gets developed

whereas Asian paints adversting is good , we cannot compare Sirca at current stageto Asian paints , it would be unfair

But u can clearly see How a. advertising manager can make difference

[sameernics]

Good set of numbers.

[sameernics]

[ChaitanyaC]

It may take a few weeks sometimes, it can even take 2 months, so you have to wait.

Not invested.

[hitesh_gangwani]

Thanks

Really Got tired for tracking

As dividend was declared on march 29 2023

So I thought Ex Date is payment Date

Other companies paying dividend was pinch of salt for my query to raise this question

[ChaitanyaC]

I am not sure, but depending on the size of the company, the SHP, the amount of cash they have readily, their experience with distributing dividends, the intermediary they choose etc, the distribution may take some time for some companies.

And even if the price has run up, receiving a dividend is always a joy, for most of us, so I understand your frustration of not receiving it soon.

[sameernics]

Read the announcements carefully. Their AGM was held on Aug 25, so wait for 30 days.

[sameernics]

Kindly post the highlights of this latest report if you have pro account. Thanks.

Sirca Paints Q1 FY24: Numbers paint the town red, growth curve bending up

[Shanki_Bansal]

Highlights of the above post:

• Top line grew by 19 percent in Q1
• Continues to expand product portfolio
• Looking to add more dealers in south, west, and east
• Marketing spends to increase in FY24
• EBITDA to be in a similar range for next 2 years

Detailed summary:

• Topline growth in Q1 was aided by strong demand and was seen across business segments.
• Unico gained further strength in the domestic market and its contribution to Q1FY24 sales was much higher than in the previous quarters.
• The company has initiated trial runs for the Italian PU products and has sent the initial batches to Italy for quality validation. After quality checks and product approvals, Sirca will gradually ramp up production in India. The inventories remain high as the company is shifting its PU manufacturing base from Italy to India. The elevated level of inventory is likely to be rationalised in 2-3 quarters.
• The management intends to increase the marketing spend to 8.5 percent of total sales, which will have a detrimental impact on its operating margins. However, this may be partially offset by cost savings from the in-house manufacturing of resin and polyurethane.
• The company has added six automatic mixtures for the Italian PU, which can produce about 54 lakh litres of paint annually. Considering the optimum product mix, Sirca can add another revenue tranche of Rs 150 crore to the existing top line

[hitesh_gangwani]

Resignation of director Mr Anil Kumar Malhotra
Due to personal commitments

bb9b4641-dbb8-4c3a-a4d8-b83cc938f5a6.pdf

[hitesh_gangwani]

Resignation of company Secretary Suraj Singh due to personal reasons

I think these 2 resignations will be temporary issue for the company but in the long term , Sirca will continue growth story