Asian Granito India LtdQ4 FY18Consumer Durables

Asian Granito India Ltd

Q4 FY18 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Order

N/A

Capex

0 of 4 growth signals are positive — mixed outlook.

Revenue guidance

Category 3

→The company expects a volume growth of around 5-6% in the next quarter (Q4 FY17) and continued growth post-GST implementation.
→For the next financial year, volume growth of around 7% was achieved in earlier quarters and expected to sustain.
→Revenue growth is supported by a shift toward high-value products like GVT, double charged vitrified tiles, marble, and quartz.
→Expansion plans include new capacities operational by April in marble and quartz, GVT third production line, and increased production of multi-charged and jumbo tiles.
→The company is focusing on increasing retail presence via exclusive showrooms, targeting to grow retail base from current 30-35% to 50%.
→Expected benefits from GST and organized market shift to maintain or improve pricing and margins.
→Joint venture plans and capacity addition in South India for soluble salt tiles to expand geographic reach and market share.
→Sustainable EBITDA margins expected at around 13.6% with improvements in coming years.

Category 3

→Confident to sustain and improve operating (EBITDA) margins beyond current 13.6% in next financial years, though exact basis point increase not specified.
→Growth driven by high-value products (GVT, double charged, marble & quartz) manufactured in-house and improvements in product mix.
→Expect volume growth around 5-6% for next quarters and post-GST implementation benefits to pricing and margins.
→Company plans to increase government business from current 10% to 25%, grow retail base to 50%, and benefit from organized market shift post-GST.
→Expansion in capacity with new lines for marble & quartz and GVT beginning April, supporting revenue and margin growth.
→Earnings growth shown by 33.3% YoY PAT increase for Q3 and 56.7% for nine months FY17; confidence expressed to maintain growth trajectory in future quarters.
→No major CAPEX planned next 1-2 years; focus on utilizing existing capacity and asset-light models to drive profitability.

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→No major CAPEX or significant fundraising plans are envisaged for the next 1-2 years as per management.
→The company plans to utilize existing capacity by product mix changes and focus on high-value products.
→Any volume growth is expected to come largely through an asset-light model, including JVs or associations with Morbi players.
→Potential investment could be explored in the South market through a JV, but this is still under process and no concrete plans or fundraises are mentioned.
→Consolidated debt increased by about Rs. 160 crores due to expansion in double charged vitrified tiles, with total debt around Rs. 375-380 crores as of Q3 FY17.
→No specific current indication of raising new equity or debt beyond existing facilities was provided in the call.

→On Page 9, Kamlesh Patel mentions that the 80 x 80 product, which is a recent addition to their portfolio, has already secured orders booked for the next 3 months in double charged tiles.
→No explicit numerical value or overall orderbook figure is provided in the transcript.
→The confidence in increasing sales, especially in GVT and double charged products, indicates a robust current and near-term demand pipeline.
→The company is optimistic about sustaining volume growth of around 5-7% and maintaining or improving EBITDA margins, driven by this orderbook and product mix.
→Additionally, the planned capacity expansions in marble, quartz, and GVT segments (starting April) and JV explorations indicate preparation for increased order fulfillment in the coming quarters.

→No major CAPEX planned for the next 1-2 years; focus is on utilizing existing capacity by changing product mix to high-value products and maximizing utilization.
→Small CAPEX below Rs. 10 crores planned for showroom development in Morbi.
→New capacity installations:
→ - Marble and Quartz segment: a new line operational from April.
→ - Third line for GVT: expected to start full operation in April.
→ - 80 x 80 Multi Charge plant progressing well, expected to reach full capacity.
→JV under consideration for a new plant in South India to leverage logistic savings and market potential in Soluble Salt tiles, but investment is still in exploration stage.
→Focus on asset light model with outsourcing and JV in Morbi for mass products, while own plants produce premium products.

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