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Yes Securities Report
Carysil Ltd. has witnessed multiple headwinds in past four-quarters due to recessionary trends in global markets impacting overall demand. However, with inventory-levels normalising at customer end and replacement demand regaining traction, we expect the company's performance to improve from hereon.
Moreover, with on-boarding of new customers the Quartz sink (52% of revenue) segment will witness healthy growth. Management aims to sell 600,000 Quartz sinks in FY24 (Q1 FY24 sales was 104,000 units).
The incremental 90,000 units capacity of stainless steel sink (13% of revenue) has also commenced operations, we reckon this will further boost company's revenue as orders from export markets are picking-up for this product.
Appliance segment (11% of revenue) will improve meaningfully post on-going capacity expansion; hence we expect higher growth for this segment from FY25E.
Overall we expect Carysil's revenue to grow by 22% compound annual growth rate over FY23-FY25E. Moreover, with steady input cost and better operational utilisation, Ebitda margins should come in at 18.5%/19% in FY24E/FY25E respectively.
At current market price, the stock trades at price/earning(x) of 25 times/17 times on FY24E/F25E earnings per share of Rs 24.6/36.3 respectively and we continue to value the company at P/E(x) of 22 times on FY25E EPS maintaining our target price of Rs 799. Hence, we retain our 'Buy' rating on the stock.
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