Carysil Ltd. Q4FY23 Result Update

The Acrysil Group was founded in India in 1989, by Ashwin M. Parekh. We produced our first kitchen sink with a technical collaboration with Schock & Co., Germany – an established world leader. 30 years later his son, CMD Chirag A. Parekh, has led Acrysil into becoming one of the largest producers of quartz kitchen sinks in the world, under its brand Carysil.

The ‘CARYSIL’ brand represents a remarkable combination of innovative design, distinctive style, and aesthetic appeal. It aims to capture customers with its unique and eye-catching appearance, while also instilling pride and prestige in those who own its products. The brand’s ultimate goal is to establish Acrysil as an unrivaled leader and the ultimate destination for all your kitchen product needs.
CARYSIL Quartz Sinks have loyal customers in more than 30 countries worldwide. This includes prominent markets such as the USA, UK, Germany, France, Canada, China, the Far East, and Gulf Countries. To further solidify its presence in European markets, Acrysil has established a wholly owned subsidiary called Acrysil GmbH in Germany.
Building upon the success of CARYSIL Quartz Sinks, Acrysil has ventured into other product categories. These include Stainless Steel Sinks, Faucets, Food Waste Disposers, and a range of Kitchen Appliances including Hobs & CookTops, Ovens, Wine Chillers, and Dishwashers. This expansion demonstrates Acrysil’s commitment to diversification and meeting diverse customer needs.
Result Highlights

Carysil Ltd. reported a revenue growth of 5.6% quarter-on-quarter (QoQ) and 4.8% year-on-year (YoY) to Rs. 145.6 crores in Q4FY23, slightly beating market expectations of Rs. 141.8 crores. However, the quartz sink business revenue declined by 29.0% in FY23 due to a 20.9% decrease in volume caused by inventory destocking. The EBITDA stood at Rs. 26.2 crores in Q4FY23, up 4.9% QoQ but down 7.0% YoY, surpassing street estimates of Rs. 25.6 crores. The EBITDA margin contracted to 18.0% in Q4FY23, down 13 basis points (bps) QoQ and 228 bps YoY, but was in line with market expectations. The company’s net profit after tax (PAT) declined to Rs. 12.1 crores in Q4FY23 compared to Rs. 16.5 crores in Q4FY22, with a PAT margin of 8.3% compared to 11.9% in Q4FY22. The company recommended a final dividend of Rs. 2.0 per share.

Valuation and Outlook

Carysil Ltd. reported a solid revenue growth of 22.7% YoY to Rs. 593.9 crores in FY23, surpassing its target of Rs. 500 crores. However, the longer destocking period for quartz sinks affected the company’s EBITDA margins. The company remains positive about restoring its margins to around 20% through revenue growth, product mix improvement, lower freight costs, and stable foreign exchange rates. The ongoing destocking process and increased marketing expenses for the domestic business will be monitored closely. Carysil expects strong demand for quartz sinks and healthy order inflow for its export business in FY24. Expansion of steel sink capacity, doubling orders for quartz sinks from IKEA, and acquiring new customers will drive revenue growth and help achieve the target of Rs. 1,000 crores in FY25.

Key Concall Highlights

1. Carysil Ltd. aims to surpass Rs. 1,000 crores in revenue in FY25, with domestic business contributing 25-30%.
2. The company renewed a $68 million order with Karran Inc for quartz kitchen sinks in the USA.
3. Demand is recovering in the US and UK markets, but slower in Europe.
4. Carysil expanded its domestic dealership network from 1,500+ to 3,100+.
5. Steel sink manufacturing capacity doubled to 180,000 units per year, generating Rs. 80-90 crores.
6. The greenfield project for the Appliances division experienced delays, with commercial production expected in September 2023.
7. A subsidiary, Carysil FZ-LLC, was incorporated in the UAE to cater to the GCC market.
8. The company acquired a 70% equity share of Tap Factory Ltd. in the UK to strengthen its position in the Kitchen and Bathroom Brassware market.
9. April revenue was impacted by SAP implementation, but the company expects 15-20% revenue growth in FY24.
10. Capex for FY23 was Rs. 60 crores, and gross debt stood at Rs. 222 crores.
11. Sales volume: 5.14 lakh units (Quartz Sink), 1.08 lakh units (Stainless Steel sink), and 28,895 units (Kitchen Appliances).
12. Destocking of quartz sinks affected sales volume this quarter.
13. The company expects to reach a 20% EBITDA margin with reduced freight costs, stable foreign exchange rates, and a change in product mix.

Click here to view the detailed report.