About the company

Established in 1987, Carysil Group has made a name for itself as Asia's leading Quartz Kitchen Sink manufacturer, ranking 4th globally. With over 3 decades of experience, the company combines German engineering, innovation, and craftsmanship. As the sole Asian manufacturer with ‘Schock Technology’ for quartz sinks, Carysil produces 1 million+ sinks annually, exporting to over 55 countries under the "Carysil" and "STERNHAGEN" brands. Domestically, Carysil has a robust market presence with over 3,200 dealers, 90 galleries, and 85 distributors. They have also introduced Physical Vapor Deposition (PVD) Technology for a metallic finish on stainless steel sinks. Their showroom and experience centers are located in Ahmedabad, Mumbai, and Gurugram.

FY24 Financial Performance

• Total Revenue at INR 688.1 Cr. v/s INR 593.9 Cr. in FY23 (+15.9% YoY)
• Export Revenue at INR 543.4 Cr. (+17.5% YoY) and Domestic Revenue at INR 140.4 Cr. (+6.7% YoY)
• EBITDA at INR 133.6 Cr. v/s INR 108.9 Cr. in FY23 (+22.7% YoY)
• EBITDA Margins at 19.4% v/s 18.3% in FY23 (+110 Bps YoY)
• PAT at INR 58.4 Cr. v/s INR 52.8 Cr. in FY23 (+10.5% YoY)

FY24 Revenue Split by Product

‍

‍

‍

‍

‍

‍

‍

‍

‍

‍

‍

‍

‍

‍

Promoter Analysis

Mr. Chirag Parekh (Chairman and Managing Director)

• He holds a BBA Degree from Europe
• 33+ years of experience in the kitchen appliance industry
• After joining the company in 1993, he successfully steered it to become one of the leading brands increasing the turnover from Rs. 3.5 Cr. in 1993 to Rs. 310 Cr. in 2021. He heads the company as the managing director since 2008

Mr. Anand Sharma (Executive Director & Group CFO, COO)

• He is a fellow member of ICAI, CS and a Cost Accountant
• 25+ years of experience in the fields of Finance, Accounts, Auditing, Taxation, Risk Management, Cross Border Acquisitions, Investor Relationship

Industry Outlook

• The global kitchen sinks market is projected to grow from approximately INR 26,560 Cr. in 2022 to INR 37,350 Cr. by 2030.
• Currently ~80-90 million units of kitchen sinks are produced globally, with around 7 million units of quartz sinks manufactured using Schock Technology. The demand for quartz sinks is growing at a 25% CAGR globally, with 9 million units specifically in demand for non-stainless steel sinks.
• The global kitchen appliances market is expected to reach approximately INR 2.96 lakh Cr. by 2028.

Investment Thesis

Leadership in Technology

It is the only company in Asia, and one of only 4 globally, that can manufacture quartz sinks using Schock Technology. This unique capability has allowed Carysil to develop over 150 models, catering to various market segments and customer preferences.

Expansion into the Bath Segment

Carysil's foray into the bath segment represents a strategic and synergetic expansion. Through its wholly-owned subsidiary, Carysil GmbH, in Germany, the company is leveraging its quartz technology to offer a comprehensive range of bathroom products. With over 60 showrooms and SIS locations showcasing their products, Carysil is well-positioned to introduce a complete suite of bathroom solutions, including fittings, WCs, and other accessories.

Positive Outlook for Volume Growth

The FY24 volume of granite sinks (a sub-segment of non-stainless-steel sinks) increased by 10% from 5.13 lakh to 5.64 lakh units and steel sinks grew by 12% from 1.08 lakh to 1.21 lakh units. The company achieved an all-time high volume of 6.5 lakh+ units, reflecting strong market demand. Carysil is confident in maintaining this growth trajectory, projecting a further increase of 15-25% in the coming years.

Sustainable Margins

With a steady capacity utilization of ~75%, Carysil is likely to maintain its EBITDA margins at ~18-20% for the next 3 years.

Diverse Product Portfolio

The in-house manufacturing of sinks, surfaces, chimneys, hobs, hob-tops, and food waste disposers further diversifies Carysil's product portfolio and strengthens its market position.

Market Expansion Through Strategic Acquisitions

Carysil has strategically expanded its market reach with key acquisitions, securing a 100% stake in Homestyle Product Limited and Tickford Orange Limited. Specifically, Homestyle Product Limited, a UK-based distribution company, provides an established channel for Carysil's sinks, while Tickford Orange Limited, brings expertise in the UK solid surface market and The Tap Factory's products.

Valuation and Recommendation

‍

‍

‍

‍

‍

‍

‍

‍

‍

‍

‍

We value Carysil at 28x FY2027E Earnings Per Share (EPS), with a target price of INR 1,057, a projected upside of 34% over the next 12-18 months.

We recommend a "BUY" rating on Carysil Limited based on market leadership, sustained operating margins, and strong demand for sinks.

‍

Disclaimer:

Mool Capital Limited is a SEBI Registered Research Analyst having registration no. INH000012449. This report has been prepared by Mool Capital Pvt. Ltd. and is solely for information of the recipient only. The report must not be used as a singular basis of any investment decision. The views herein are of a general nature and do not consider the risk appetite or the particular circumstances of an individual investor; readers are requested to take professional advice before investing. This document is not, and should not, be construed as an offer or solicitation of an offer, to buy or sell any securities or other financial instruments. This report should not be construed as an invitation or solicitation to do business with Mool Capital. Mool Capital and its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.