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On track to achieve Rs7-7.25Bn revenue target for FY24!

Result Synopsis

CARYSIL Ltd registered stellar performance in Q2FY24 wherein consolidated revenue increased by 17.5%YoY & 15.5%QoQ owing to improvement in order inflows for Quartz sinks and strong ramp-up in stainless steel segment. Quartz sinks volumes increased by 17%YoY & 43%QoQ while stainless steel sink volumes reported a growth of 6%YoY & 62%QoQ. The appliance & Solid surface revenue grew by 30%YoY/3%QoQ & 43%YoY/3%QoQ respectively. Exports & domestic mix for the quarter stood at 78% & 22% respectively. In exports company has witnessed massive improvement amidst the inflationary scenario. Moreover, CARYSIL is in process of on-boarding new customers, which should enable them to maintain the growth rate going ahead. In domestic biz as well, company has expanded the distribution network & the same will enable them to expand their geographic presence & crease strong brand image. UK subsidiary also reported robust revenue growth of 53%YoY & 18%QoQ wherein Quartz/Stainless steel/Others constituted 47%/31%/22% respectively.

Management maintained their revenue guidance of Rs10Bn by FY25E and Rs7- 7.25Bn by FY24E with EBITDA margins of ~20%. Company is confident of growing the topline sequentially from hereon owing to expanding order book & on-boarding of new clients.

We reckon, CARYSIL should witness improvement in demand from hereon. Hence, we expect Quartz volumes to grow by 18%CAGR over FY23-FY25E. Also, with rampup in stainless steel biz & better trajectory in UK subsidiary’s, we expect Revenue to grow by 23%CAGR over FY23-FY25E. Incrementally with better volumes, margins are likely to expand, hence we reckon EBITDA margins to improve by 250bps over next 2-years. At CMP, the stock trades at P/E(x) of 23x/17x on FY24E/FY25E EPS of Rs 31/40, both revised upwards by 25%/10% respectively, largely due to better-thanexpected performance of UK subsidiaries & higher margins. We continue to value the company at P/E(x) of 22x on FY25E EPS, arriving at a target price of Rs882. Hence, we maintain our BUY rating on the stock.

Result Highlights

* Revenue stood at Rs1.63Bn, a growth of 17.5%YoY & 15.5%QoQ.

* EBITDA margins came in at 20.1% Vs 16.1%/18.4% in Q2FY23/Q1FY24 respectively. Absolute EBITDA increased by 47%YoY & 26%QoQ to Rs330Mn.

* Net profit stood at Rs156Mn, a growth of 66%YoY & 34%QoQ.

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