Carysil Ltd
NSE:CARYSIL
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
744
1 104.45
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Carysil Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Carysil Limited Q1 FY '24 Earnings Conference Call.This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.[Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Chirag Parekh, Promoter and Managing Director. Thank you, and over to you, sir.
Okay. Good afternoon, everyone, and thank you for joining us on Carysil Limited Q1 FY '24 earnings conference call. I hope everyone had a chance to view our financial results and investor presentation, which we have posted on the company's website and stock exchanges. I'm accompanied by our CFO and COO, Mr. Anand Sharma, and SGA, our Investor Relations advisor, on this call today.Allow me to begin by providing you with some key economic updates. India has substantial advantages over the rest of the world due to political stability, a strong domestic consumption-led economy and robust regulatory environment for the financial sector. The global economy is widely impacted by the prolonged Russia and Ukraine war resulting in supply chain disruptions, significant surge in essential goods prices and increase in inflation. Central banks across the world tightening the monetary policy to bring down the accelerated inflation. However, the U.S. economy is now going through a recovery and inflation concerns have significantly eased. The U.S. and U.K. have faced the most challenging time where we foresee the second quarter marking the beginning of the growth momentum in the region [indiscernible].Furthermore, it is imperative that we closely monitor the situation in Europe. A few countries within the region, for example, France is currently facing significant inflationary pressures, which is expected to continue for the next 2 to 3 quarters.At Carysil, we constantly focus on expanding our market penetration in our market geographies like U.K., U.S. and Europe. Our marquee plants such [indiscernible], et cetera, have helped us gain major market share and strengthen our position across geographies. We're also tapping new and emerging markets like GCC, Turkey through our overseas subsidiaries.Let me give an update regarding the current quarter. The quarter gone by has started witnessing good order inflow from our customers across U.S., U.K. and others. As we discussed during our last earnings call in May '23, we successfully implemented the SAP ERP system in the company. However, the production and sales were operating at a lower scale compared to the normal capabilities in April 2023. This has resulted in a shortfall in revenue of INR 8 crores to INR 10 crores in the current quarter -- sorry, it is about INR 15 crores in the current quarter. We are confident to recoup the revenue losses coming quarters owing to decent order booking and increased capacity utilization. Besides, it is important to mention that parts of Gujarat also faced a cyclone in June 2023. The cyclone disrupted quartz operation in the final week of the month causing a slight impact on our revenue on dispatches.As we stated earlier, we have created dedicated team in different verticals in the domestic market. As part of our ongoing B2B strategy, we are improving our [indiscernible] developers and architects and increasing our penetration in the domestic market. Our dealer network has grown over 3,200, and we are collaborating closely with our dealers with various schemes to increase domestic sales.We firmly believe that the next leg of growth will be driven by expansions. In order to achieve the stated objective, we have acquired additional land parcel measuring 43,379 square meters. This will lead to a cumulative land bank of the company of 1.03 lakh square meters for our future use.Let's discuss the performance of each segment individually. Quartz segment. Global markets have initiated updates of the orders, we foresee the growth momentum to persist robustly in the forthcoming quarters. Our capacity [ pledged in all the quarter ] is for 60%, we are now targeting around 80% by the year-end, thanks to all the new addition of new customers.Steel Sinks segment. We are pleased to inform that we have installed additional 90,000 unit production capacity, which will, volumes, deliver from quarter 3 onwards, bringing our total annual capacity to 180,000 units. This category will be driven by a mix of quadro and other stainless sales and PVD blocks. We are uniquely positioned as the main manufacturer of PVD and [ structural ] sales in India. When it comes to the technology, it provides improvement in [ porting ] live aesthetics and the technology of the manufacturing. Additionally, we have observed an increase in demand of PVD sinks in export markets also.Appliances [indiscernible] segment, the growing preference of modular kitchens, coupled with affluent household aspirations of creating a smarter home will result in higher sales in the smart kitchen appliances category. The domestic built-in kitchen appliance market is underpenetrated. It gives a lot of confidence that this segment will drive our business. The expansion of 1 lakh unit, each in 2 phases, which includes a primarily fast-moving chimney hood models and other appliance is facing some delays in the procurement of machineries and hence, our first phase expected to commence in H2 FY '24. Also, we have started the assembly line of the faucet division during the quarter. The full fledged production of faucets is expected to start from H2 FY '24. InIncorporation of WOS. In the previous quarter, we incorporated a wholly owned subsidiary in the name of Carysil FZ in Dubai to cater to the GCC region. We commenced operations in this quarter. We wish to promote sales in the region under our own brand, Carysil. We shall be opening showroom in Dubai in a very prominent location on Sheikh Zayed Road from October 2023. Furthermore, we are also proud to announce the establishing of own subsidiary in Turkey, which is most -- which is one of the most emerging market in the world for home improvement products. The primary objective of [ setting up subsidiary ] is to sell products under our own brands of sinks and appliances. We intend to leverage our brand and solid products to expand in new markets, thereby capturing market share.Outlook for FY '24. We would like to reiterate that the Europe plus One strategy has already started playing out. Customers are looking for more [ prominent ] products at a better price, reducing a dependency on a single vendor. As all you know, last year, we witnessed consumption slowdown and destocking of the inventories in our major export territories and hence the capacity utilization was reduced. As the global economic reviving, we have increased capacity utilization and will increase further in the coming months.Post quarter 3, we will be in a better position to relook at our pending capacity expansion of the quartz sinks from 200,000 sinks. China plus One and Europe plus One strategies have grown dramatically in our steel sinks division also. We're starting supply of steel sinks to our U.K. subsidiaries, GROHE, Germany and other export markets. In Appliances division, we will get better domestic share once we have our in-house manufacturing capacity ready in H2 FY '24.We wish to reiterate that we have the plan to achieve revenue of INR 1,000 crores by FY '25. To support this, we think, along with our dominant position in the quartz sinks division, we see steel sinks, faucets, appliances can also play a very large targeted role.Now I would like to call our CFO, Mr. Anand Sharma, to update you on the company's financial performance. Thank you. Over to you.
Thank you, sir. Good afternoon, everyone. Let me take you through the consolidated financial performance of the company. Quarter 1 FY '24 performance. Sales volume for quartz sinks stood 104,000 units. Stainless steel sinks stood at 12,000 units. Kitchen appliances and faucets total [ stood to 5,000 units ] at Q1 FY '24.Consolidated total income stood at INR 142.80 crores. EBITDA for the company stood at INR 27.4 crores in Q1 FY '24 as compared to INR 26.5 crores in Q4 FY '23, growth of -- margin of 3.3%. Profit after tax end-MI for the quarter stood at INR 11.6 crores in Q1 FY '24.Thank you. Now I'll open the floor for question and answers. Over to the operator.
[Operator Instructions] The first question is from the line of Ashwini Damani from Ratnabali.
A couple of questions. I think, did we just say that we will do 80% utilization for FY '24 in the quartz sinks segment, and this is up from 60% currently? Did I get it right?
Yes.
Sir, have we won any major new orders because this would mean a major jump in the order booking on some new customer win?
Yes. So I think the current quarter booking was at that. Unfortunately, due to SAP implementation, we had to -- we were not able to dispatch the larger quantity of 16,000 sinks. From quarter 2 onwards, we are targeting 16,000 -- 60%-plus. And we had several breakthroughs in our new customer base, which is giving us confidence that on a quarter-on-quarter basis, the utilization of the current capacity is going to jump from 60% to 70% and then 80%.
Sure, sir. On the SAP implementation, normally, when companies work on parallel ERP systems, they always have teething issues. But for the first time that we ever heard that someone has forgone sales while implementing SAP. So can you just explain what happened and what -- how could we have resolved it, et cetera?
Yes. I'll just give to my CFO, who is heading this ERP project of SAP, Mr. Anand Sharma. You can reply.
So this SAP, we have put the cutoff date of the financial year because running a parallel ERP system creates a lot of hiccups and quite -- it's, I mean, voluminous job for the team to do. And it always happens that you don't get confident on new system if you're running something parallel. So we have consciously decided that with the end of financial year 2023, we will move to the SAP state from the day 1. Based on that, we have migrated from the -- our legacy software to the SAP from the 1 [ August ] itself. This has given us the clear cutoff date and it has helped us to build our system within few weeks' time. If we go on the parallel system, it takes a month to [ build it ]. If you...
I understand that, but did you forgo sales just to implement SAP?
It's not a forgo of the sales. It is only we are not able to utilize the capacity during that period, and it's only a teething problem. It's not something that we could not able to do anything. It is just our number of transactions we're able to execute in the legacy software and the number of transactions we're able to do in that SAP base is less. It's not that we forgo the sales, it is only spillover, the impact of which we'll see in the quarter 2. It's not a loss of sales. It is just a spillover over the quarter.
Sir, one more question, sir. Across our presentation, we mentioned that we are one of the 4 players who make quartz sinks using Schock Technology. We wanted to understand if there are any other technologies apart from Schock and are those -- I mean, do major players in the world also use non-Schock quartz sinks? Especially do they sell those things to, say, the IKEAs and the Home Depots of the world, the non-Schock technology quartz sink?
So there are other technologies available, whether we are able to sell it to IKEA and others, I am not aware about, nor I'm in a position to -- able to tell you because I honestly don't know. My answer would be, I think the chances are very, very less that they could do it. The other technology available are very different than -- are very different than Schock and what our competition has told us that they have failed in a lot of quality criteria and which -- what happens is that if you have a bad sink and it fades or cracks, then you have to change the whole countertop. That's a lot of loss to the person -- the kitchen. So that's why you have more people trying to have a good quality sink so they don't have to break the platform just in case if there is any quality problems.
The next question is from the line of Udit Gajiwala from Yes Securities.
Yes. Just firstly, one follow-up. You said that the sales loss was 16,000 in last quarter, which has spilled over in Q2. Is that understanding correct?
Sorry, I'm not able to hear you properly. Can you come again, please?
Yes. So you mentioned that in terms of number of sinks, we could not deliver 16,000 sinks, 1-6, in Q1. So does that imply that there is a spillover in Q2?
No, no, that was on -- the approximate loss of sales was approximately around INR 15 crores for quarter 1.
Okay. Sir, what would that translate into your quartz sink business, the numbers?
That would be approximately -- INR 15 crores is around 30,000 numbers.
Okay, sir. And sir, we have seen like gross profit margin improving for the quarter at consol basis, that is what I'm referring to on a sequential basis. So what was the cost that went down during the quarter? And even though we had a lower utilization, our GP is fairly higher. So what would that attribute to?
So in the last call also I had mentioned that I think the whole supply chain cycle is in our favor. During the COVID times, the freight costs, input costs, energy, for everything had gone off the roof. Now everything has come back to normal and which we were quite -- what do you say, [indiscernible] smart part is not to pass the whole benefit to the customer. So we could retain this majority part to us, and we can only pass a small portion to the customers. Hence, we are able to see the improvement in the bottom line.
Okay, sir. And sir, for '25, when you say that you are confident of achieving INR 1,000 crores revenue, could you give us a split that what will be our quartz, stainless steel, solid surfaces, your Tap Factory that you acquired under U.K. businesses?
So I think -- so very honestly, that will be the last question, but I think later on after the call, you can contact us. We'll be able to give you that. But I can tell you broadly what it is. You see, what we are doing is, and I think that will be probably answering some other investor call questions too, that right now, we are expecting to hit the run rate INR 720 crores to INR 750 crores annual run rate. Order booking for the quarter 1 also was like that. But due to the SAP, dispatches, there was issue and due to the cycle on and off. So from quarter 2 onwards, we'll be hitting the rate of INR 720 crores to INR 750 crores. While I say this, the current breakup will be approximately the same, which we will send it to you, which we will see on an investor presentation. So that will be the presentation -- that will be the breakup for that. Further, the company is exploring other M&A opportunities. And hence, the [ extent of the growth ], what it comes next year, will be based on the organic growth of our current business and a mix of M&A.
Okay. Understood, sir. And just lastly, the land that we have procured, I believe that this will not be for the 2 lakh sinks that we have deferred, right? Because for that, we already had capacity, [Technical Difficulty] the land availability. So this is for which project or this is just you are keeping it ready for any of the future newer products? Or what is the idea behind this?
So what we have in future, expecting that once we are able to -- through this INR 1,000 crores sales next year, what is coming in next, so we have a lot of new opportunities. We have lot of new expansion plans. We may get some more large breakthroughs in the kitchen sink segment itself, not necessary for steel too, it could be a mix of quartz and steel sinks, since I've been mentioning that we have got large breakthroughs and hence, we are looking at a very strong order booking of the company. So this may again happen next year. We are also looking at a future for expansion of the ceramic products in the company. We are also looking at expansion of our faucets in our kitchen appliance space. So with all this together, we were kind of falling short of the land bank, and we were able to get at a good price. So I think we -- I think those are -- I think we found it very -- I think, very [ imperative ] that we buy this land for future expansion.
The next question is from the line of Vaidik from Monarch Networth.
Sir, my first question would be, I just wanted to understand whether are we witnessing any industry shift from quartz sinks to stainless sinks?
Sorry, I was not able to hear you?
Industry shifting from quartz to stainless or stainless to quartz?
From quartz to stainless, because we saw -- because as we see in our results, we saw a decline in quartz revenue for the quarter and also, we saw it in the Q4 also. And as you are more dependent on exports and you can see the Europe situation is getting worse again day by day, so is there any shift which we are seeing?
Yes. So I would also like to state it again, which I've been saying in the last 3 investor call quarters, that there was a big stocking for the customers and there was destocking taking place during the COVID times, our customers had placed large orders, and there was a revenge travel. There were lots of loss of other home improvement. So based on a larger decline, there was a lot of stocking, which we were expecting that destocking to be over by quarter 4, which I [indiscernible] the last call, it will go to the quarter 1. So I think we are back now. The quartz sinks is the most important part of our business and the fundamentals of a quartz sink business globally stays as additive. It's very strong, quartz sinks are 100% the next future.
Okay, sir. And sir, my next question would be this year on a -- like in FY '24, how much do we expect in terms of revenue for quartz sinks? How much growth can we expect? FY '24? For the current year?
So I think, current year, we are expecting approximately -- yes, so we are looking at around INR 330 crores to INR 350 crores of quartz.
How much?
INR 330 crores to INR 350 crores exports of quartz kitchen sinks.
[Operator Instructions] Thank you. The next question is from the line of Chirag Fialoke from RatnaTraya.
Just 3 questions, sir. One, can you just guide us for what is the gross debt at the end of this quarter? That would be the first thing.
Yes. Gross debt at the end of this quarter is INR 220 crores, which includes working capital, term loan and acquisition loan, everything putting together.
Understood. Understood. Very clear. And as you had mentioned earlier also just to another participant, just before me, that destocking is broadly towards the end, can you guide us towards what is the current channel inventory in terms of number of days or months? And I understand it will be just an estimate, but what is your estimate of that right now?
You're talking about estimates...
And the customer or the channel lengths.
Yes, yes. A customer normally holds an inventory between 60 to 90 days.
And currently, what would that number be?
Yes, yes, same. So right now, they have dropped below 90 days. So they are somewhere around 60 days or some are out of stock with some models. So there is -- the destocking is almost done.
Understood, sir. Understood. Clear. Very clear. The last question is just on the domestic revenue side. And correct me if I'm wrong or what is the right way of looking at it, if I'm not looking at it the right way. Broadly from June '22 to June '23, if I look at our domestic revenues, they have been in the range of, say, INR 30 crores to INR 35-odd crores. And in the meantime, our domestic dealer base has grown almost 60%, 70%, whereas our overall revenues have remained flat. This just seems a little odd, generally speaking, but is there something that I'm missing here or -- would love your comments on that.
So I -- so last time also I answered the same question. Some of the dealers take place at the end of the quarter. So you see the momentum picking up now. So whatever we have to increase the dealer network would be quarter 3, quarter 4. This year, it's just not happened now. So when you see -- so because again, quarter 1, we had issues with the dispatches and [indiscernible]. But from quarter 2, you'll be able to -- clearly, you'll be able to see that there is a significant improvement in the sales because of the expansion of dealer network.
The next question is from the line of [ Tushar Ragarpate ] from Kamakhya Wealth Management.
Sir, I was just seeing your volumes. So your peak volumes are near to 1,70,000 in the quartz sink business. And sir, I just wanted to understand like, when can we reach those volumes? And also when we can surpass those going forward? That would be my first question, sir.
Even, I am waiting to surpass the volume. I don't have an answer. But I think the good thing is, like I said, company is back on track, we are able to crack some large -- we had some breakthroughs with some larger customers. So we are quite hopeful with the rate what we are going, we could, from quarter 2, quarter 3, but very likely from quarter 2, we'll be able to hit that run rate or maybe surpass.
Fair enough, sir. And sir, in the domestic business, as far as channel checks in Pune and Mumbai, so we could figure out that many people don't -- are not aware of the quartz sinks per se, they are more aware of stainless steel. So any initiatives from the company there in order to make aware the consumer about the quartz properties and all? And what are we doing in terms of the architects in order to -- then to push the product to the -- push in the sense like make aware you to customer about the product?
So let me answer this question as two. One is, overall, we have to do a lot in marketing of quartz, 100%. So that's why we are building our marketing team. Number 2, I don't agree with your this thing on Poona, Bombay yes. But Poona, we have the #1 market share in Poona for quartz sales or on steel sales. My Pan India head is also here, we have the biggest market share also in the built-in segment in Poona. So Poona, we have been able to do a lot of marketing. People know -- mostly everybody know what quartz sink is. Just 2 days back, I opened up a third gallery in Poona for sink and appliances.Bombay, as you know that we are -- we have -- the Bombay sales have significantly improved over last year. And we have recruited a large team to be camped in Bombay for the B2B, for B2C to see that we start marketing very aggressively the quartz sinks in Bombay. I think Bombay will take a time just like any other metro takes more time to understand what it is. [ The more ] on the South side, the Central side, North side, people are much more easily -- they get converted into quartz sinks, but Bombay is a little bit tough for anything.But I'm quite sure with my -- I'm very confident with the team, with the pace what they are doing and with the projects which we have already -- we have cracked in a lot of new builder projects in Bombay, and we are expanding our dealer network and opening new galleries in Bombay which we -- Atria Mall, as a gallery, we have a prominent place in [ Andheri U Turn ]. So lot of traction has now come to Bombay. So yes, our efforts are on and it will continue.
Okay, sir. Sir, my last question. You hired new person for the Brassware business. Just wanted to understand what sort of incremental revenue contribution we can get from the new businesses which we are entering into? Your thoughts on that, sir?
So it's a small start-up business. The revenue is approximately about INR 15 crores. So not a very significant revenue will be added. But what it will come is that this technology of this [ 5-flow ] or hot water, which is going to have a significant advantage to us for our India and for the global market because [ 5-flow ] tap is the future in the world. In the same tap, you have a boiling water to make tea, you have sparkling water, there's no soda bottles required, drinking water, so no drinking water required. So I think it's amazing tap as a future and the company thought very prudently to tap in a company at this stage only where we are able to get a great access to this technology, and we can share this technology across all the geographies globally.
The next question is from the line of [ Arvind Desai from TruFocus Investments ].
Sir, I wanted to ask about -- my first question is, what is the split between white label products and branded products and margins for the same?
You want to understand the [indiscernible] model?
Branded versus OEM.
Branded versus OEM?
Yes, yes.
Okay. Sorry, I did not hear you well. All our new initiatives are for the B2C. So we would like to sell our brands. So our initiative in gulf countries, our initiative in Turkey, our initiative in U.K., our initiatives in other parts of Europe, our initiatives in Australia, which are going, next month, to open up 2 galleries in Australia, in Sydney and Melbourne, clearly shows the signs that the company would like to increase the brand, the B2C market share. As of now, we are -- it's quite low, but I think we are -- the company is going to put emphasized efforts that at least in the next 5 years' time, the company should have a branded market share of at least 30%.
Okay. And then on the margins for the same, if you can?
Margins, if -- yes, we -- so it depends. I think right now, the margins are almost the same, whether we do OEM or we do the branding. Because right now, the cost of marketing is very high. But eventually, I think eventually the play out will be, the branded market, the margins will be higher.
Okay. And for the next question. So you talked about built-in projects in Poona and stuff like that. So may I know the -- what are sale numbers and volumes on the segments and also margins, if I can?
No, we're not able to hear. I'm not able to understand.
You are not audible.
Yes, not audible or very clear.
Am I audible now?
Yes, yes. But...
Yes. So you talked about built-in projects, I think, in Poona and like that. So may I know the sale numbers and volumes for these built-in projects and, if possible, their margins?
Yes, yes. So it will be -- right now for us, it will be -- this quarter is very, very tough, but we can probably send you the information to you. So you can get in touch with SGA, our advisor, and they will tell you whatever we have to -- yes? Is that okay with you?
The next question is from the line of [ Garvit Goel from Nvest Analytics ].
Sir, you mentioned company is looking for the inorganic opportunity. Earlier, I think we were targeting this INR 1,000 crores via organic growth. Now we are saying we will go for the inorganic way. So can you please put some color on it, whether I'm understanding this correct or not?
We have always said it's going to be a mix of organic and inorganic. The large part is going to be -- large part will be organic, but the fillers would be inorganic. Yes?
And sir, whether the top line target for INR 750 crores, that will be intact or not?
I'm unable to hear you. Sorry. Can you speak slowly, please?
Sir, top line target, I think in the last concall you mentioned for FY '24 was [ at or around ] INR 750 crores kind of revenue. So is it intact?
Yes. Like I said, we will start -- able to hit the run rate of INR 720 crores to INR 750 crores from quarter 2.
And sir, in last concall, you also mentioned about some innovative products and you are saying we will announce those agreements that we are entering into with some other players and put some color on that in the upcoming quarter. So how the development is going on, sir?
Development is going on very, very strong, and we have, within the next quarter or two, a big launch of all the innovation products in the ACETECH exhibition in Bombay in the first week of November.
And sir, you mentioned in your opening remarks about those -- some problems in -- related to inflation going on in France. So how is it going to impact our revenues in FY '23?
You're seeing inflation in where?
France. I think in your opening remarks, you had mentioned that there are some problems going on in France related to inflation.
France, okay, okay. All right. So yes. So I think the world is living with the fact that this is what is happening. Business may go a little bit up and down, the business is -- now people are gradually adapting to the geopolitical situation, the strikes in France, the issues in U.K. So I think this is the world what we live in, right? So while the business may go a little bit up and down, but the business, we expect sales still to remain stable. Nothing is going to have a large impact on the business.
And, sir, going forward, on the sustainability of the EBITDA margin. So what is our guidance from here? Like costs are also getting reduced due to inflationary --inflation cooling off. So what is your view on that?
I also stated earlier that the EBITDA margins are [Technical Difficulty], that with the volume expansion, the margin expansion also is going to happen. I think it's very clear. It's because, after the post COVID, all the costs, freight, input costs, everything has gone down. And I also told a second very major point that most of the clients ask for how much you're going to share with us, but we've been able to retain most of the benefits. And so we are quite hopeful that the margins -- that there will be a margin improvement along with the volume expansion.
And sir, lastly, on acquired land in Bhavnagar. So just to understand, like 6, 7 months back also, we made an acquisition. So what exactly is the quote process? Like this time, we did, I think, high amount in square feet terms as compared to earlier one. So please throw some light on exactly what happened in last 6 months that led to this additional land acquisition? We have installed the capacity of the faucets and for the built-in appliances. And we also had expanded the quartz sink capacity also. So now we are almost left with not much land. And same [indiscernible] are also expanding. So expansion is going on across. So we need to have surplus land for any of the categories for us to be able to expand. Because if we assume that the INR 1,000 crores, which the company plans and is aiming for next, then the next level will be a next phase in the company, which, obviously, we need a lot of land for future expansion.
The next question is from the line of Devika Jain from Ratnabali Investments.
So I see that we have revised our...
May we request you to use the handset, please? It's not very clear.
Am I audible now?
Yes.
Yes. So sir, my question would be with respect to our revised target of INR 1,000 crores sales by FY '25. So in order to reach that target, we need to grow by 30% for the next 2 years. So on what basis have we revised this target? Where will the growth mainly come from? And lastly, do you have any new orders from existing customers or from new customers that is in your pipeline?
So your point well taken. We are in a position right now with the annual run rate of INR 720 crores to INR 750 crores a year. With the new clients on board, with the existing plants pouring out more orders to us, because of the [ U Plus ] strategy coming into play, this is going to have a significant impact on the growth for us from quarter 2 itself. So once we talk -- once we are expecting a strong growth in quarter 2, we'll -- then you will see, with that, we already grow, hitting a run rate of INR 740 crores, INR 750 crores a year. Then you are talking about INR 250 crores for next year. Even if organically we expand by 10% to 15% and then balance comes from any kind of M&A, we'll still able to hit the INR 1,000 crores run rate. So I think we are quite confident that the way we have planned moving forward, there is a lot of substance to it. And I think we will be able to see this from quarter 2.
Okay. And sir, one last question from my end. So on social media, we have observed that the company has started opening a lot of showrooms or galleries, as you may say. And in fact, in the last 3 to 4 months, we've observed that in every 10 to 12 days, we see an announcement. What is your strategy with respect to this? How many showrooms are we targeting by FY '25 end -- by FY '24 end and '25 end and what are the costs associated with this?
Yes. So I think what we have seen that the dealer expansion is great [ that ] we have sinks. Once you have a one-stop solution, when you have the sink, faucets and the built-in appliance, we try to sell it as a one-stop solution, as a complete solution, you need a full gallery. So we have started having new galleries, which has also started giving us a brand visibility in the market. So we have opened more than, I think about, 80 galleries by now. We are -- we'll be able to do -- we have kind of another 20. So we plan to raise about approximately 100 galleries by end of the year. And domestic market is fundamentally very, very strong. We have seen order bookings with these galleries opening and all, there is a great momentum, there is -- it's all a great vibe, positivity for Carysil and more and more people are coming to us. Like Delhi is such an amazing showroom. Now just coming to people, Delhi showroom, people were like, can I get a franchisee? So I think the domestic market this year, we are looking at a growth rate about 40% -- 30%, 40% growth over the last year. I think that was one.What was the second question? The domestic market one?
What are the costs that are associated with this?
So it's -- costs is -- it actually varies from whatever showroom and whatever we do but mostly, what we do is we give a display on a discount, and we take share part in the furnishing of the showroom. But the rentals are always with the franchisees in which we don't participate.
[Operator Instructions] The next question is from the line of Kunal Ochiramani from Kitara Capital.
Sir, I wanted to ask what is the store level economics and what is the operational CapEx we do per store and the breakeven point after opening the store. Some light on that?
Yes. So generally, all our store ROI is less than [ 3x ]. So that's how we operate.
Revenue-wise?
Revenue-wise and average, we're -- galleries, again, depends upon the square feet, but starting any gallery would be about -- talk about at least INR 8 lakhs to INR 10 lakhs a month.
And how -- the EBITDA margins for this, EBITDA and gross margins per store?
It's all based on the sales margin what we get, because it's a franchisee, it's not our own. So it's incremental sales is going to give us the ROI. [Technical Difficulty].
And what is the operational CapEx that it should to open a store?
Approximately, it takes about INR 20 lakhs.
It depends on the size of the gallery, but on average, it'll be INR 15 lakhs to INR 20 lakhs.
The next question is from the line of Viraj Parekh from JMP Capital.
Sir, just to understand the FY '25 vision that you gave. You gave a breakup between INR 750 crores and the balance INR 250 crores on which, what your expectation is, which is obviously going to be a mix of organic and inorganic growth. So what I wanted to understand that when we operate our plants at the optimum utilization level with the capacities that we have right now currently without any CapEx going forward, do you mean to say we can do a peak revenue of INR 750 crores? Or we can do more than that?
So you're only talking about the manufacturing facilities in India, minus the U.K. business, we can -- between the quartz sinks and the steel plant together, we can do INR 700 crores.
All right, all right. And if I may ask, I'm not too sure as to what -- how much can you discuss with me on call, but on what direction are we looking out when we are talking about acquisitions? And typically, what is the value we are ready to spend on inorganic acquisitions, which we might see in [ FY '25 ] as per your comment?
So I think it's very, very hard for me, and I don't think this is the right stage to even talk about it. What we are seeing is, any synergies, which we feel is going to help the company to take us to the next step or help us to scale up our businesses or scale up our brand, this is the M&A we are looking at. Whatever scale. Now you've see in past, we have taken [ a GBP 3 million ] company, the we bought a GBP 12 million. And then last one is already GBP 2 million. So I mean it all depends on what the business is, but somewhere we obviously see that we have some kind of an edge whether it's technology, whether it's brand, whether it's, network, channels, or in quartz. So yes. So -- but anything -- vision is quite clear what we want to be, where we want to be. So everything will be aligned to our vision.
The next question is from the line of Chirag Shah from White Pine.
Sir, before I ask my question, just a clarification, you indicated in the previous participant's question about something like INR 20 lakh. What was that? It was with respect to the ROI for the domestic dealer. So what was this INR 20 lakh number that you highlighted, sir?
So the INR 20 lakh number is on total of the cost of a dealer with product display, furnishing and all. And ultimately, we look at about [Technical Difficulty].
Okay. So that is the CapEx part, right? That would exclude the rentals?
No, including the rentals.
Including the rentals. Okay. Sir, my question is actually on the B2C side. If I look at it as an outsider, you are spreading too fast and too thin, because you are looking at too many countries apart from India to have your own B2C channel. Some of the countries you mentioned, and I presume you must also have additional countries in your mind which you may be thinking to expand over a period of time. So can you just elaborate on that because opening 1 store in 1 country or 2 or 3 stores in one country may not necessarily help the B2C business or may not be -- make the business as profitable as you intend to make it? So is this the initial strategy to try out and then have a much more focused approach? Or how are you looking at it? If you can elaborate on that?
So I think first clarification, INR 20 lakhs, I think was the CapEx in the ROI model, rent is included. So I just want to clarify that. So one -- but two is...
Rent is included, right?
Rent is not included in the INR 20 lakhs. Rent is extra. But in the ROI model, rent is included. We take that cost into account. That is if we are paying the rent. If we are not paying the rent, then we only worry about the ROI, what we are putting the money into the showroom. Okay, anyway, so I think that's clarification. Number 2 is on the B2C part, we are not opening. It's not our stores that we're opening on a country. So first, we appoint a distributor to distribute our products. And with that distributor, opens up dealers across that area. And out of that, like opening a franchisee here, we also open up a franchisee in a foreign country. That's how it works.
Okay. What I'm saying is, so this distributor or the dealer is a multi-brand or is it specific to Carysil in the international market, not in -- I'm talking more about international markets?
Mostly, it's a multi-brand. So unless if the company wants to open up an experience center with the partnership of a distributor, that also can be explored.
The next question is from the line of [ Kaushal from DDAS Investments Group ]
So I just had 3 sets of questions. So I'll just go one after the other. So you had an aspiration of INR 1,000 crore after like 2 years. So what is your aspirational margin? Like I understand that once you are going to B2C, you might end up having a slightly bigger margin. So I just wanted to get a color on that, how you're thinking about margins in FY '25?
See, our current level EBITDA margins are doing around 18% to 20%. With the volume expansion, the margin expansion is going to come. But what -- to what level it will come, I honestly don't know. But definitely, there will be a margin expansion so we are looking at around 20% -- around 20%-plus. So I think that's point number 1. Second is very important, like again I want to say that we've been able to retain and not able to pass on all the price benefit to the customers so that's why we are able to -- we are confident that we'll be able to do a 20%-plus margin EBITDA moving forward.
Right. So I will -- maybe my second question will clarify why I wanted to ask that. So I just wanted to understand whether you -- like the newer products that you are creating, what is your target audience? Like is it a more premium segment of the customers? And if it is more premium segment of the customers, then I was guessing that probably since you'd be launching premium products, your margins might expand? That was where I was coming from. So I just want to know what is the targeted audience?
Yes. So our product positioning is always premium customers. So we are not going to move away from that. Because we see the future is all going to be premium, brand and lifestyle. So that's where the people have put in a lot of money and the brand will only be if you are on that space.
Okay. Understood. And couple of more things regarding the same thing. So do you think that the premium segment of the market might be a bit crowded because there are other brands as well? And if you think so, then what is your specific strategy to differentiate yourself? And what is like your distribution -- like are you trying to just separate somewhere in the distribution network? And is -- are you mostly trying to penetrate deep into India or are you trying to spread across all of the geos? Like I just wanted to understand your color and to how you strategize in approaching the premium segment of the market.
Yes, I will just -- what -- I will only talk about India because globally, it's a very long topic. Once you want to come into the office, we are free to talk on what we do. But on India is that, what is the strategy, what our company has is that we are the only company in India right now who has a complete one-stop solution that you enter a Carysil showroom, you get from sinks to tap to the built-in appliance. So if you have any service issues then you do it by one -- you do by one call in any of the Carysil [Technical Difficulty]. One of the -- now, I honestly don't know that with sinks, are there any premium brands or not, not in [indiscernible] that I know. Built-in appliances, yes, but on kitchen slates and faucet side, probably not. So we are a combination of a one-stop solution to a customer to make it slightly easy. You come to a Carysil showroom and you get one of the best quality products. I'm not talking at a cheap price but at a very competent price. And you have a German-engineered technology, which is far, far superior than the rest of the competition.So I think the way we do is our trump card is like quartz sinks, so our trump card is the quartz sink, anybody -- because it's so much in demand, people love quartz sinks. So when they come to buy a quartz sink, we're obviously going to fish on the built-in appliances. Just Y-o-Y, our built-in appliance sale was nil. We had hardly anything. And now we are about, I think, INR 40 crores, INR 50 crores or something. So I think this is -- now this is in India, this is becoming a lifestyle thing. The quartz sink is going to be lifestyle. Carysil faucet is going to be lifestyle. Carysil built-in appliance is going to -- so it's going to be a lifestyle statement to have a Carysil in your kitchen. So that's where we're going to build our brand.
Okay. So just a last follow-up to this. So I guess you have already started releasing your products in certain markets, as you already told, you have done, I think, INR 40 crores, INR 50 crores. So do you see that the hypothesis that you described to me, do you see this working out? Like are you seeing that people are coming to buy quartz, but then they are spending a bit more and also buying allied kitchen products like your kitchen microwave or cooktops? Have you seen that thing panning out in your stores?
Yes. Absolutely.
Ladies and gentlemen, due to paucity of time, that would be our last question for today. I now hand the conference back to the management for their closing remarks. Thank you, and over to you.
Thank you, everyone. I hope we have been able to answer all your questions. However, if you need any further clarification or want to know more about the company, please contact our team or SGA, our Investor Relations advisors. Thank you once again for taking the time to join us on the call.
Thank you very much. Ladies and gentlemen, on behalf of Carysil Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you.