Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Carysil Ltd (BOM:524091, Financial) reported a consolidated revenue growth of 25.8% for Q2 FY25 and 33.2% for H1 FY25, driven by strong international market presence.
- The company has expanded its dealer and distribution network significantly, from 1,500 to over 3,500 dealers, enhancing its domestic market reach.
- Carysil Ltd (BOM:524091) is launching new product lines, including 20 new faucet models and a range of smart built-in appliances, which are expected to drive future growth.
- The company is seeing positive momentum in the US and UK markets, with Europe showing early signs of recovery, which could boost overall product range performance.
- Carysil Ltd (BOM:524091) has invested in expanding its faucet division capacity and is strategically increasing its production capabilities to meet growing demand.
Negative Points
- The company's margins have been impacted by increased raw material costs and export freight rates, particularly due to geopolitical issues affecting the Red Sea.
- There has been a decline in US sales, which is a high-value market for Carysil Ltd (BOM:524091), affecting overall margins.
- The United Granite LLC subsidiary in the US has experienced subdued demand, resulting in a muted performance and losses at the PBT level.
- Carysil Ltd (BOM:524091) faces challenges in the domestic market due to a soft retail environment and macroeconomic factors affecting urban demand.
- The company's working capital levels are elevated, partly due to inventory build-up in anticipation of BIS certification requirements, impacting cash flow.
Q & A Highlights
Q: The company's margins have been on the lower side for the past four quarters. How do you plan to improve this situation in the upcoming quarters?
A: (Unidentified_2) The decline in margins was due to a product mix shift and reduced sales in the US, a high-value market for us. Additionally, the Red Sea crisis increased freight charges, and geopolitical issues raised raw material costs. However, we are seeing positive traction in US orders and a decrease in export freight and raw material prices, which should improve margins moving forward.
Q: Can you provide insights into the domestic market growth and how you see the second half of the year?
A: (Unidentified_2) The domestic market is soft, especially in retail, but our growth initiatives have shown positive results. We have improved our faucet sales by 50% and are launching new products, including smart built-in appliances. We expect better traction in the domestic market, despite overall muted demand.
Q: What is the status of the United Granite LLC subsidiary, and when do you expect it to return to profitability?
A: (Unidentified_3) United Granite LLC experienced a decline due to local market conditions, resulting in losses. However, with changes in the US economy and new initiatives, we expect it to return to profitability by the next financial year.
Q: How much of the QIP funds have been utilized for CapEx, and when can we expect further capacity additions?
A: (Unidentified_3) We have used less than INR 5 crore for CapEx and allocated INR 31.25 crore for working capital. We are optimistic about upcoming deals, which may require further expansion, and we are prepared to use QIP funds for this purpose.
Q: Can you elaborate on the BIS certification's impact on your appliances category and how it will benefit the company?
A: (Unidentified_2) The BIS certification will be effective from January 1st, impacting kitchen hoods, especially those imported from China. This will eliminate non-compliant competitors, providing us an opportunity to expand in the Indian market with high-quality products.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
