Pokarna Multibagger Stock

Discussion in 'Ask A Query About Your Stock Picks And Portfolio' started by Srouta Mukherjee, Apr 20, 2017.

  1. Srouta Mukherjee

    Srouta Mukherjee Well-Known Member

    Mar 28, 2015
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    Pokarna Limited : A "Quantra" Bet ?

    Background of the company

    Pokarna Limited was founded in the year 1991 and is one of the largest exporters of finished granite from India dealing in over 70 premium colours. Pokarna processes its granite at two state-of-the-art manufacturing facilities and has its own quarries. company also processes several colours from carefully identified independent quarries in Angola, Norway & Ukraine as well. Besides exporting finished granite, the company also manufactures and exports quartz based engineered stone under the brand name of “QUANTRA”. For the engineered stone, the company’s production facility is spread across 1.7 million sq. ft. at Visakhapatnam (Vizag). The company started with the commercial production of quartz based engineered stone in Oct’09 and spent ~200 crores on the set up of the production facility.

    Genesis of the idea

    Usually the first port of call is an idea that comes from an independent source. This time, it was from a US based hedge fund manager who is short a large quartz manufacturer in the USA. As a part of the thesis, he had claimed that the company was losing market share to quartz manufacturers from other countries, including from India. The gist is:

    • The Engineered stone/quartz top market in the USA is about USD 2 bn and growing at 10-15%
    • It’s a consolidated market with few players – the largest of which is Caeser stone at $ 550 mn
    • Pokarna is at about $ 40 Mn in quartz revenues and can grow ahead of the market
    • There is a place for a lower price player who can offer the same quality at Caeser stone, especially from an emerging country. Caeser stone’s facilities are in Israel and Turkey and have higher over head costs.