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Thursday, August 14, 2014

Acrysil Ltd - A Great Multibagger Stock to Own!

Dear Reader,

Our equity analysts published Hidden Gem - Nov 2012 research report and shared it with all Hidden Gems members.  Research report was published 1.5 years back on 25th Nov 2012. Hidden Gem stock of Nov'12 was Acrysil Ltd (BSE Code: 524091) and our team recommended buy at average price of Rs. 105. Acrysil is also one of the stock recommended by us as a 5-Bagger stock in July last year under our special report - 5 Hidden Gems - 5 Baggers within 5 Years.

Acrysil has posted excellent top line and bottom line growth in recently announced 1st quarter results on 12th August. Sales rose 27.30% to Rs 32.50 crore in the quarter ended June 2014 as against Rs 25.53 crore during the previous quarter ended June 2014, net profit of Acrysil rose 25.95% to Rs 3.30 crore in the quarter ended June 2014 as against Rs 2.62 crore during the previous quarter ended June 2013. Today, Acrysil India Ltd has made its all time high of Rs. 437.40 and closed at Rs. 425 giving overall returns of 305% to our members. Acrysil is already a 4-Bagger stock within period of 18 months for our members and still looks good as an investment bet for long term investors.

We are not suggesting any partial profit booking as we believe company is getting re-rated considering strong growth outlook for kitchen utility products in India and company leadership position as manufacturer and exporter of Composite Quartz and Granite Kitchen Sinks.Company has rewarded share holders with regular dividends and bonus issue, future looks promising for small company like Acrysil (market capital of merely 200 crores) with huge potential and strong demand of premium products in kitchen utility segment.

Below is the update from Acrysil management on recently launched Brand - Sternhagen: 

Sternhagen, the German brand that symbolises the pinnacle of luxury in design and engineering will soon be launched in India. The brand, owned by Acrysil GmbH, Germany (a wholly owned subsidiary of Acrysil Limited, India) was recently launched in Las Vegas, USA and will shortly be launched in Singapore, Vietnam and the UK. The product roll out will follow in other countries like China, Thailand and Germany. The Sternhagen range has already earned accolades from the industry for its awe inspiring designs and amazing quality and finish during Acetech 2013 in New Delhi. 

The Sternhagen collection of washbasins will initially have four nature inspired exclusive designs namely, D√ľne (inspired by sand dunes), Seerose (inspired by petals of water lily), Golden Cut (90° geometric cut design) and Kristall (inspired by natural crystal). The collection provides a subtle visual reminder of nature, and each design connects people with emotions and memories associated with nature. The washbasins are designed in Berlin, Germany by EMAMI DESIGN (No. 1 of the worldwide Red Dot Design ranking). 

While the designs are set to revolutionise the premium bathroom market, what’s beneath the surface is the ultimate in engineering excellence. Sternhagen wash basins are made from Sanitary Quartz (Sani-Q) discovered and perfected after years of intensive R&D. Sani-Q is a patented high-tech quartz with an ultra smooth silky finish and has a built-in hygienic armor both at its surface, as well as the core. Sani-Q’s silk finish lends itself perfectly for easy upkeep and the most creative artistic sculpture. The products have been thoroughly tested for quality and durability with a series of extreme tests including scratch tests, stain tests and durability tests. 

The Sternhagen range of washbasins will be manufactured by Acrysil at its state-of-the-art manufacturing facility in Bhavnagar, Gujarat. The raw material (Sani-Q), the highly acclaimed designs and the moulds will all be sourced from Germany.

Speaking on the eve of the launch, Chirag Parekh, Chairman & Managing Director of Acrysil said, “Acrysil’s business is built around inspiration, innovation and the pursuit of excellence. The Sternhagen range of washbasins demonstrates how creative thinking can change the way we do business by embracing the highest standards in concept and construction. I am confident that the range which symbolizes the ultimate in taste and class will redefine luxury in its segment.”

The Sternhagen range of washbasins will be marketed worldwide and initially just 2000 units per annum would be available for the domestic market. The products would be priced in the range of Rs. 21,000 to Rs. 60,000 per unit. The Company will also shortly launch the Sternhagen range of faucets which will feature bathroom mixer with electronic controllability and showers with aromatherapy function. Customers will have the option to select an entire bundled set of bathroom solutions.

The Company plans to open flagship stores in Delhi, Chandigarh and Ludhiana followed by Mumbai and Bangalore to showcase its range of products. Jan Ziegler, Brand & Marketing Manager, will be at the helm of Sternhagen’s marketing and branding activities. Moreover, company is incorporating subsidiary in Hong Kong which will further strengthen its operations globally.

Management has already shared their plan to be no. 1 in kitchen segment and set target of becoming a 1000 crore company by 2020. It seems to be an over ambitious target to us considering yearly revenue of Rs. 78 crores in FY 2013. Howover, the recent steps taken by the company's management to drive high growth in this niche area of kitchen utility products is impressive. This is one of the industry, which has the potential to grow at CAGR above 25% in coming years considering increase in urbanization and increasing interest of middle class families towards modular kitchen.

Saral Gyan Past Recommendation: Acrysil - Our Hidden Gem Stock of Nov'12

1. Sales turnover of the company has doubled in last 5 years, where as net profits have declined in last 4 years due to high raw material prices and slowdown in US and Europe. Company has made an entry into some entirely new geographies like Columbia, Hungary, Iran and Israel. Company has also customized several new models in terms of new styling and design for their existing clientele in Europe, Russia, USA and the Far East to drive growth.

2. Management is now looking aggressive to grab domestic market share for its premium quality products. Company is also increasing its product portfolio to offer complete package of new products to their clientele. Currently, company generates 80% of revenue from exports and now aims to increase their domestic sales from existing 20% to 30% in next couple of years.

3. Domestic sales of the company have increased from 1.1 crores in 2001-02 to 12.4 crores in 2011-12. In fact, in FY 2011-12, domestic sales of the company have grown by nearly 43%. Company is also opening galleries to show case their products in metro cities like Mumbai, Delhi and Ahmedabad to boost sales in domestic markets.

4. As per our estimates, Acrysil can deliver bottom line of 80 million for full financial year 2012 – 13, annualized EPS of Rs. 21.3 with forward P/E ratio of 5.4 X for FY 2012-13, which makes stock an attractive bet at CMP.

5. Management has rewarded share holders by paying consistent dividends since 2006. Dividend yield at current market price is above 3. Recently, company also issued bonus share to share holders at the ratio of 1:2

6. On equity of Rs. 44.58 million, the estimated annualized EPS for FY 12-13 works out to Rs. 21.3 and the Book Value per share is Rs. 73. At current market price of Rs. 113.95, stock price to book value is 1.56, which makes stock valuations reasonable with a long term view of 18-24 months.

Considering reasonable valuations and opportunities in domestic markets of using premium quality products for luxury homes, we find Acrysil Ltd an attractive pick. Saral Gyan Team recommends “BUY” on Acrysil Ltd. for a target of Rs. 230 over a period of 18-24 months.

Buying Strategy:

  • 50% at current market price of Rs. 113.95
  • 50% at price range of Rs. 95 - 100
To Read / Download Saral Gyan Hidden Gem - Nov'12 Research Report - Click Here

Acrysil (India) Ltd is 1 of those 18 multibagger stocks which have given returns in the range of more 100% to 700% returns to our subscribers in last 4 years. Team of equity analysts at Saral Gyan put lot of efforts & smart work to identify Hidden Gems (Unexplored Multibagger Small Cap Stocks) and Value Picks (Mid Caps with Plenty of Upside Potential) which not only grow your capital at a healthy rate but also ensures protection of your capital during market downturn.

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Team - Saral Gyan.