ACRYSIL

Acrysil Ltd manufactures and sells kitchen sinks (installed capacity of manufacturing 2,75,000 sinks per annum).The Company markets its products under CARYSIL brand. It sells granite sinks, stainless steel sinks, and Vetro Inox sinks, as well as faucets and food waste disposers.But its main product is the niche quartz sink.Majority of companies revenues come from exports to foreign countries(export contribute nearly 80%).The company started manufacturing granite sinks through a technical collaboration with Schock & Co of Germany (it owns 10.15% stake in Acrysil. Acrysil has also entered into manufacturing of stainless steel kitchen sinks to cater to the domestic market, through its subsidiary Acrysil Steel Private Limited

Now the management of Acrysil has decided to tap the potential of domestic market & diversified its product portfolio. Recently, the company launched a range of lifestyle kitchen appliances like faucets, hoods and chimneys, hobs and cook tops, ovens and microwave ovens, food waste disposers and wine chillers. With the improvement in economic levels of people,more are ready to spent on luxury interiors.This is a major positive for Acrysil.

The operating margin of this company is about 15%.The recent rupee fall is an added advantage to Acrysil which has 80% of its revenues coming from exports. But at the same time we also should keep in mind that the main raw material Quartz is imported. So one need to watch out for the price of raw material. As Acrysil is targeting mainly the premium segment customers, i feel that the company can pass on the increase in raw material costs to it customers

The company has a low equity base of 4.5 crores.This is after the management recently giving bonus in the ratio 1:2.The management is investor friendly and the dividend payout ratio is 25%. They have sent a positive signal to the market by balancing their growth objective with sharing the profits with the shareholders. The sales growth, profit growth and ROE for company is 21%,11% and 27% over the past 5 years.This year the company is expected to do an EPS of 22 Rs per share

The company has aggressive plans of becoming a Rs.1,000 cr company by 2020.During the last one month the stock had a very good run.On 28th October the stock hit life time high of 155 Rs and is currently trading at 129 Rs.The current market Capitalization of company is just 60 Cr rupees. At the moment its too premature to compare it to TTK Prestige or Hawkins or Gandhimathi Appliances. But this is a small company where the potential for growth is good, they are into niche products & their product is perceived as a premium product. As the equity base is small, the volume of stock traded is very low. I feel its a good bet to be in one's portfolio if you are looking into a mix of export and consumption story.One can start adding at the cmp of 129 Rs in SIP mode and any fall in share price can be used to add more

Note:-I have vested interests in Acrysil and its safe to assume that i am holding it from lower levels