Buy Acrysil Ltd For Target Rs.1,150 - Yes Securities
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1.2Mn Quartz sink capacity by Q2FY23!
Our view
Acrysil Ltd registered a strong quarter wherein company reported 58%YoY sales growth on account of strong demand for Quartz sinks in overseas markets owing to sharp uptick in home furnishing trend backed by shift in demand from stainless steel sinks to Quartz sinks. We reckon, this trend to continue and share of Quartz sinks to total global kitchen sinks is likely to expand from 10% to 20% over coming 5‐years which should be driven by robust demand from USA/EUROPE/UK (70% of total company’s exports). With Acrysil being one of the only 4 Global manufacturers of Quartz sinks via German technology, we expect Acrysil Ltd to report volume growth of 33% CAGR over FY21‐24E. Owing to strong demand, Acrysil Ltd has announced another capex of 2L Quartz sinks which will be operational by Q2FY23, taking the total Quartz sinks capacity to 1.2Mn. Acrysil is also expanding their stainless steel capacity from 90,000 units to 180,000 units by Q4FY22 which should further boost company’s topline. Hence, we expect company to register revenue growth of 33% over FY21‐ FY24E.
Result Highlights
* Sales stood at Rs1,194 Mn (highest quarterly sales) reporting a growth of 58% YoY & 22.4% QoQ
* EBITDA for the quarter stood at Rs260Mn, registering a 67%YoY & 22.4% QoQ growth. EBITDA margins came in at 21.8% Vs 20.6% in Q2FY21.
* Net profit increased by 89.5%YoY & 32%QoQ to Rs178Mn. Net profit margins came in at 14.9% Vs12.4%/13.8% in Q2FY21/Q1FY22 respectively.
* Domestic revenues for H1FY22 increased by 77%YoY to Rs448 Mn & export revenues grew by 79% to Rs1,722 Mn over similar period.
* Company announced capex of 2L Quartz sinks which will be operational by Q2FY23 with a capital outlay of Rs200 Mn via internal accrual and debt.
Valuation
* We expect Acrysil Ltd to report robust Revenue/EBITDA/PAT growth of 33%/33%/37% over FY21‐FY24E. At CMP, company is trading at 22X on FY24E EPS of Rs38.3. We continue to value the ACRYSIL Ltd at 30x on FY24E EPS‐ arriving at a target price of Rs1,150 (previous Rs1,023), implying an upside of 38%. Hence, we maintain our BUY rating on the stock.
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