Asian Gran­ito In­dia Ltd

Money Times - - Stock Watch - By Amit Ku­mar Gupta

(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

line.

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.

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