Carysil q2 fy24 concall notes:

• Finanicials

  • Revenue (in crores):
    • Q2 fy24 164 (yoy growth of 18% & qoq growth of 15.5%)
    • Q2 fy23 139
    • Q1 fy24 142
    • H2 fy24 311 (yoy h1 growth of around 2%)
    • H1 fy23 305
  • EBITDA
    • Q2 fy24 34, margins: 20.6% (yoy growth of 48% & qoq growth of 24%)
    • Q2 fy23 23, margins: 16.4%
    • Q1 fy24 27, margins: 19.2%
    • H2 fy24 61, margins: 20% (yoy h1 growth of around 7%)
    • H1 fy23 57, margins: 18.4%
  • Net profit:
    • Q2 fy24 16 (yoy growth of 78% & qoq growth of 33%)
    • Q2 fy23 9
    • Q1 fy24 12
    • H2 fy24 27 (yoy h1 de-growth of 4%)
    • H1 fy23 28
  • Average realizations for granite sinks at around rs. 5630 for the current vs rs. 5270 last year.

• Revenue distribution

• Guidance

  • Management is guiding for a 1000 crore revenue by end of fy25.
  • Management expects for the remaining quarters of fy24 (i.e. q3/q4 fy24), they should be doing a run rate of 720-750 crores of revenue, i.e. around 180-190 crores of per quarter revenue.
  • Domestic sales should be growing at a healthy pace for the second part of fy24(~30-40% growth) and expects to cross 200 crores of revenues next year(fy25). They closed on a good October. Dealer network 3200+ and gallery count increased from 10 to 60 in the last 2 years.
  • Company witnessing an inflow of new orders and potential prospects to tap in near future. In the final stages for a large quantity of orders coming in q4 (both in granite sinks & stainless steel sinks).
  • Guidance of overall margins at around 18-20%, domestic sales will have margins at around 17-18%.

• Volumes:

  • Granite sinks volumes q1: 1L, q2: 1.5L, h1: 2.53L (current capacity 10L)
  • Stainless sinks: 54k: h1 fy23 (current capacity 1.8L)
  • Kitchen appliances: 28k: h1 fy23

• Business updates

  • Management sees the market for home improvements increasing rapidly in recent years and carefully aligning strategies to make India the world’s premier manufacturing hub and top alternative destination. They aspire to become the strongest player in the world for sink manufacturing.
  • Company was able to gain market share from competition and acquire new clients. This is because of cost-efficient product offerings.
  • Assembly lines for faucets have started. Currently only 2-3% of the overall revenue. Carysil believes that the technology is critical for growth, and designed a new chimney that will be the best of the class.
  • They are part of a trade show in Mumbai ACETECH exhibition, and received an overwhelming response from the audience. Carysil brand domestically emerging not only in sinks but also in built-in appliances.
  • Management expects to participate in a number of exhibitions in the UAE and the United States to increase brand awareness.
  • Focus is very much on USA & other markets like UAE, South Africa, Australia and new markets like Oman, Saudi & Turkey.
  • Europe is CIF and US is FOB, on an apple to apple basis US business is most profitable.
  • IKEA orders for stainless steel sinks will commence in q4 fy24 and also a large volume for stainless steel sinks from a new customer will commence in q4 as well.
  • Channel inventory overhang is over and management expects the worst is behind for the home improvements space.

• Acquisitions

  • Carysil always looks for acquisitions with strong cash flow and profitability.
  • Company is in a spree of acquisitions, having already acquired 3 in the UK (tap factory and two more), and now acquired United Granites LLC in the US. Company looking for inorganic growth and looking at opportunities which complement their existing basket of products.
  • United Granite LLC is into kitchen tops, faucets etc. and management is planning to sell sink + faucet in a box. They are also planning to bring back the technology to India with this acquisition.
  • The entire team except the promoter are retained. The current senior management will lead the business in the future.
  • Currently, the United Granite’s capacity utilization is ~60%, but will take it to 90% in coming quarters with improved efficiency.
  • The United Granite’s EBITDA has been between 7% and 11% over the past three years. We estimate this to increase to more than 15% in the coming quarters with increased capacity and better material sourcing and operating leverage.
  • At peak utilization it can generate a revenue of 15-16m$ (120-130 crores). Current year expecting sales of 9.5-10m$.

• Things to look for in coming quarters:

  • Domestic sales & brand emergence in India
  • New orders coming in q4 fy24
  • Guidance of 1000 crores by fy25 (guidance of 250 crores per quarter as against current 165 crores per quarter)

• Overall management is very bullish on the prospects for the coming quarters and stock has moved 30% after q2 results. If the narratives match with the numbers in the coming quarters we probably expect good returns.

• Disclosure: 5.4% of the overall portfolio, added after q2 results at around 703 before it started to run after the concall.

Hello The Seeker …

Sorry to see you exit… Frankly if you are a seeker you should keep the faith …

Many thanks

Malolan

They’ve given out dividends of 183% so far. Reserves stand at 17 cr against capital of 12. Though there’s no benchmark for cash reserves, the basic thumb rule for IT companies is to have a strong reserve.

Thank you for the response on this thread, I think my hypothesis that such an idea would be relevant to a lot of investors has been validated by the response. The crucial thing for me now is to keep up with the discipline.

The basic process remains the same as above.

Date: 1st December, 2023

Link: https://www.nseindia.com/report-detail/display-bulk-and-block-deals

I know the obvious name you would be looking for here is Brand Concepts, where Ashish Kacholia sir has entered. But I’m not discussing it, because I’ve found that several investors I’ve gotten to know through twitter or otherwise had discovered the story quite early and also on just a strict criteria basis, more selling took place in bulk deals than the buying which gives me another reason to skip talking about Brand Concepts.

1. Cantabil Retail

Authum Investment and Infra has made very good investments in the past, along with them PC Kothari seems to have invested in the company which is indeed very interesting to me. The sales growth for the past few quarters has been very impressive and with this it is trading at only 28.5 times earnings which is very interesting. The margins have also moved up in the last few years. This is definitely an interesting business to study.

2. Narmada Agrobase

Although I’m not sure of the credibility of the investor in question here, Trishul Chauhan seems to have entered in a large way in the stock. The long term stock chart for the stock seems to be climbing back after being down for a long time. The sales performance on a year by year basis seems to be taking a huge upside this year. I would be interested in studying this stock, with the caveat that this could be cyclical.

3. SecUR Credentials

I’m also writing about this stock here because apart from a large entry by two investors, it seems to be a very interesting idea. It is a credentials verification company which essentially eases the HR function of companies. Their sales are down this quarter, which comes as no surprise to me, because the professional service industry is doing poorly. But is this a bottom play by the investors? Because I think there will be a few more quarters where the problem will persist.

4. Sumit Woods

Very interesting concept again here, but more importantly, the stock seems to have run up a lot so investors need to be careful. But real estate is making a comeback and this is a very different kind of developer. So do check it out.

One way I’m looking to improve this thread is by incorporating BSE only bulk deals too. Let me know your thoughts on the thread, any of these companies or your suggestions like always.

Just curious to know…Your screen name is Nifty investor…Does it mean you invest in nifty index or stocks of nifty universe?