Asian Granito India Ltd
(BSE Code: 532888) (CMP: Rs.433.05) (FV: Rs.10) (TGT: Rs.500+)
Asian Granito India Ltd (AGIL) manufactures wall and ceramics tiles, marble and quartz. It manufactures various types of vitrified tiles including glazed and polished in 1,200+ designs. It also exports to ~50 countries. Its Grestek product category includes XXL Decor Rosetta Stone, Levigato Glitter Beige, Levigato Glitter Aqua, XXL Rosetta Stone Grigio, XXL Decor Rosetta Stone Beige, XXL Rosetta Stone Beige, XXL Decor Basaltina, XXL Basaltina Stone Grigio, Velvet Bottichino FP, Rosalia Honey FP, RosaliaBianco FP and Elegant Travertino FP. Its floor tiles product category includes Circlet Art, Circlet Marmo and Circlet Gold. Its wall tiles product category includes Butterly Art Decor and ButterlyCrema Decor. Its composite marble product category includes Lapato and Bush Hammer. Its quartz product category includes Azul and Coasta Beige.
The Company is expected to outperform the industry growth over the next few years. It targets to achieve a turnover of Rs.2000 crore in the next two years on the back of the following growth drivers:
a) Increased utilization of crystal unit (capacity increased from 5 MSM to 9.9 MSM in FY17) plus addition of one more
b) Additional Rs.100 crore from improvement in utilization (from ~70% to 90%); addition of one line (12k SM) will
result in an incremental Rs.150 crore.
c) Quartz expansion – generate additional Rs.40 crore (from 2.64 lakh sq.mt. to 5.3 lakh sq.mt.): AGIL is getting orders
from its dealers’ network having a market size of Rs.200-250 crore and majorly procuring quartz from Rajasthan.
d) New unit in Andhra Pradesh (in JV) – target revenue of Rs.150 crore. The unit will produce GVT and soluble salt
vitrified tiles as the southern market has a strong demand for soluble salt vitrified tiles.
e) Increase Outsourcing being a preferred partner – addition sales of Rs.240 crore expected
f) GST – AGIL, being an organised player, is expected to gain in the domestic market share with the implementation of GST. As per the management, GST implementation could have the following outcomes: i) Morbi players may convert to organized players as GST is difficult to bypass; ii) Morbi players focus on the export market as China is hit by the anti-dumping duty imposed in other countries and vacates the place for players like AGIL; and iii) Morbi players outsource their facilities to organized players like AGIL.
Valuation: AGIL is expected to outperform the industry growth of 10-12% in the coming years. Further, improvement in margins will lead to healthy profitability on account of increased capacity, increase in sales of value-added products and expansion in dealers/distributers network.
Technical Outlook: The Asian Granito India Ltd stock looks very good on the daily chart for medium-term investment. It is moving in a strong uptrend and trades above its 200 DMA level.
Start accumulating at this level of Rs.433.05 and on dips to Rs.398 for medium-to-long-term investment and a possible price target of Rs.500+ in the next 12 months.