Building Materials - Sector Update - 11-06-2024 - Systematix

Systematix
Institutional Equities
Building Materials 11 June 2024
Strong pipes volume to sustain; tiles, woodpanel eyeing revival in 2H

SECTOR UPDATE 4QFY24 results and outlook: PVC pipe sector continued to outpace tiles & bathware
and woodpanel sectors in 4Q. Pipes volume/revenue grew by a strong 28%/11% YoY
Industry Building Materials and beat our estimates by ~6%. SI (up 41%/22%) continued its robust performance,
followed by ASTRA (up 23%/9%), FNXP (up 19%/1%) and PRINCPIP (up 16%/-3%).
Despite low base vs. peers, APOLP could grow by a low 10%/1% YoY. On low and
Please refer Export-Import data affordable PVC prices, companies remained confident on robust outlook. Six wood
panel companies under our radar reported 12% rise in 4Q revenue while EBITDA/PAT
BM coverage - rating and target price declined 3%/19% (broadly inline). GREENP’s MDF volume declined 7% YoY; Century
Company
Old New Old TP New TP Upside (CPBI, up 34% YoY) and Greenply (MTLM) could ramp up. Elevated timber prices
Reco Reco (Rs) (Rs) (%)
remain a concern for the plywood sector. SYIL’s revenue came up 1% YoY (inline);
Plastic Pipes
PAT surged 40%, aided by ~20% EBITDA margin and lower tax rate. Companies are
Apollo Pipes
(APOLP)
HOLD HOLD 691 691 5 hopeful of a robust demand revival in the next 6-12 months as the housing units
Astral under construction start getting delivered to the buyer. Tiles & Bathware
HOLD HOLD 1,949 2,017 (7)
(ASTRA) consolidated revenue/PAT of 4 companies under coverage grew 6%/8% YoY (inline).
Finolex Ind
HOLD HOLD 269 305 (10)
Tiles volumes/revenue of SOMC (up 7%/5% YoY; 3-5% ahead of estimates) outgrew
(FNXP)
KJC (up 6%/1% YoY; inline). SOMC also saw 120bps QoQ rise in EBITDA margin
Prince Pipes
(PRINCPIP)
HOLD BUY 723 779 20 (10.8%) while KJC reported 160bps contraction at 13.9%. SOMC’s scrip has given
~20% return in a month since our rating upgrade to BUY after 4Q result. After a
Supreme Ind
HOLD HOLD 4,658 5,215 (13) muted FY24, demand revival is expected in 2HFY25. CARYSIL (revenue/PAT up
(SI)
Tiles / Bathware 31%/25% YoY) retained Rs 10bn revenue and 20%+ margin guidance in FY25.
Carysil Top picks: PRINCPIP (upgrade to BUY), SOMC, CARYSIL, SYIL
BUY BUY 1,147 1,147 33
(CARYSIL)
Cera
Plastic pipes – strong momentum sustained: 4Q pipes volume/revenue grew by a
Sanitaryware HOLD HOLD 7,684 7,684 4 strong 28%/11% YoY (detailed table) and beat our estimates by ~6%. SI (up
(CRS) 41%/22%) continued its robust performance, followed by ASTRA (up 23%/9%), FNXP
Kajaria Ceramics
(KJC)
HOLD HOLD 1,233 1,233 (0) (up 19%/1%) and PRINCPIP (up 16%/-3%). Despite low base vs. peers, APOLP could
Somany grew by a low 10%/1% YoY. After sharp volatility in last 2 years, EBITDA margin has
Ceramics BUY BUY 883 883 21 normalized for most of the companies. On low and affordable PVC prices, companies
(SOMC)
remained confident on robust outlook, driven by plumbing, infra and agri verticals.
Wood Panel
Greenpanel
Wood panels – demand revival 6-12 months away: Six companies under our radar
HOLD HOLD 326 326 4
(GREENP) reported 12% rise in 4Q revenue while EBITDA/PAT declined 3%/19% (broadly inline
Stylam
BUY BUY 2,328 2,178 35
with our estimates, detailed table). GREENP’s MDF segment continued to face
(SYIL)
pressure on volume (down 7% YoY) and EBITDA margin (16.4%); Century (CPBI,
volume up 34% YoY) and Greenply (MTLM) could ramp up their volumes. Elevated
timber prices remained a concern for the plywood business of all companies. SYIL’s
revenue came up 1% YoY (inline); PAT surged 40%, aided by 20% EBITDA margin and
lower tax rate. Companies are hopeful of a robust demand revival in the next 6-12
months as the housing units under construction start getting delivered to the buyer.
Tiles & Bathware – CRS, SOMC led the show in 4Q: Consol. revenue/PAT of 4
companies under coverage grew 6%/8% YoY and came in line with our estimates
(detailed table). Tiles volumes/revenue of SOMC (up 7%/5% YoY; 3-5% ahead of
estimates) outgrew KJC (up 6%/1% YoY; inline). SOMC also saw 120bps QoQ rise in
Ashish Poddar
EBITDA margin (10.8%) while KJC reported 160bps contraction at 13.9%. Low and
ashishpoddar@systematixgroup.in
+91 22 6704 8039 stable gas prices continued to aid margins. After a muted FY24, companies are
Mahek Shah
hopeful of demand revival in 2HFY25. On a high base, CRS reported 2% revenue
mahekshah@systematixgroup.in growth and a strong 17.3% EBITDA margin. CARYSIL’s revenue/PAT grew 31%/25%
+91 22 6704 8040 YoY, though missed estimates by a wide margin. Management reiterated Rs 10bn
revenue and 20%+ margin guidance in FY25.
Investors are advised to refer disclosures made at the end of the research report.
Systematix Research is also available on Bloomberg SSSL <Go>, Thomson & Reuters Systematix Shares and Stocks (India) Limited 1
11 June 2024 Building Materials
Table of Contents
Valuation Table.................................................................................................................................................................. 3
Building Materials - Stock price performance ...................................................................................................................... 4
PVC Pipes - 4QFY24 Review - Company-wise quarterly results ............................................................................................. 5
Tile & Bathware - 4QFY24 Review - Company-wise quarterly results ................................................................................... 7
Woodpanel - 4QFY24 Review - Company-wise quarterly results .......................................................................................... 8
PVC Pipes – Change in estimates + Variance with Bloomberg estimates ..............................................................................11
Tiles & Bathware - Change in estimates + Variance with Bloomberg estimates ...................................................................12
Export-Import statistics in MDF, Laminates and Tiles .........................................................................................................14
Commodity prices, currency movement.............................................................................................................................15
PVC Pipes - PE band and standard deviation (one-year forward) ........................................................................................16
Tiles & Bathware - PE band and standard deviation (one-year forward)..............................................................................17
Woodpanel - PE band and standard deviation (one-year forward) ......................................................................................18
Building Materials – Detailed financial peer comparison ....................................................................................................19
COMPANY SECTION
Plastic Pipes
Apollo Pipes (HOLD, TP: Rs 691).........................................................................................................................................24
Astral (HOLD, TP: Rs 2,017) ................................................................................................................................................29
Finolex Industries (HOLD, TP: Rs 305).................................................................................................................................33
Prince Pipes & Fittings (BUY, TP: Rs 779) ............................................................................................................................38
Supreme Industries (HOLD, TP: Rs 5,215) ...........................................................................................................................43
Tiles & Bathware

Carysil (BUY, TP: Rs 1,147) .................................................................................................................................................51
Cera Sanitaryware (HOLD, TP: Rs 7,684) .............................................................................................................................56
Kajaria Ceramics (HOLD, TP: Rs 1,233) ...............................................................................................................................61
Somany Ceramics (BUY, TP: Rs 883) ...................................................................................................................................66
Wood Panel
Greenpanel Industries (HOLD, TP: Rs 326) ..........................................................................................................................72
Stylam Industries (BUY, TP: Rs 2,178).................................................................................................................................77
Valuation Table
Exhibit 1: Valuation Table – 1

M-cap CMP TP Upside T PE 1-yr fwd PE (5-yr) P/E RoIC (%)
Reco
(Rs bn) 10-Jun (Rs) (%) 26E (x) Mean +1 SD -1 SD FY24 FY25E FY26E FY24 FY26E
Plastic Pipes
APOLP 26 660 Hold 691 5 26 39 62 16 61 38 25 13 14
ASTRA 581 2,161 Hold 2,017 (7) 60 69 89 49 106 82 64 29 39
FNXP 210 340 Hold 305 (10) 26 18 27 9 44 35 29 15 19
PRINCPIP 72 648 Buy 779 20 28 34 48 20 39 32 23 16 22
SI 762 5,999 Hold 5,215 (13) 43 28 38 19 71 59 49 34 37
Tiles/Bathware
CARYSIL 23 861 Buy 1,147 33 25 21 31 10 39 24 19 17 23
CRS 96 7,358 Hold 7,684 4 35 33 39 28 40 38 34 50 51
KJC 197 1,239 Hold 1,233 (0) 35 40 50 29 47 41 35 24 28
SOMC 30 730 Buy 883 21 20 26 39 13 31 21 17 15 23
Wood Panel
GREENP 39 314 Hold 326 4 17 18 27 9 27 23 16 14 18
SYIL 27 1,618 Buy 2,178 35 20 16 21 10 21 19 15 36 39
CPBI 154 692 NR NR 29 39 19 47 39 30 13 21
GRLM 77 604 NR NR 30 36 24 56 38 26 13 19
MTLM 35 283 NR NR 24 30 18 50 23 18 12 22
Source: BSE, Bloomberg, Systematix Institutional Research
Exhibit 2: Valuation Table – 2

EPS (Rs) CAGR (%) (FY19-24) CAGR (%) (FY24-26E) RoE (%) RoCE (%) EV/EBITDA (x)
FY24 FY25E FY26 Rev EBITDA PAT Rev EBITDA PAT FY24 FY26E FY24 FY26E FY24 FY26E
Plastic Pipes
APOLP 11 18 27 22 20 12 33 38 57 7 8 12 13 27 13
ASTRA 20 26 34 18 19 23 17 22 29 17 20 24 28 63 41
FNXP 7 9 11 10 (10) (4) 12 45 40 5 12 7 14 43 13
PRINCPIP 17 20 28 10 11 17 18 29 30 12 15 15 21 23 14
SI 84 102 122 13 15 19 19 21 20 21 22 27 29 48 33
Tiles/Bathware
CARYSIL 22 35 46 22 26 27 28 32 45 17 22 17 23 20 12
CRS 184 196 220 7 9 16 12 12 9 18 17 24 22 29 23
KJC 26 30 35 9 9 13 12 14 15 16 18 21 23 28 21
SOMC 24 34 44 9 9 16 12 17 37 13 18 14 20 13 9
Wood Panel
GREENP 12 14 19 21 26 33 13 26 29 11 14 12 16 16 10
SYIL 76 86 109 15 18 27 25 21 20 24 22 34 34 14 9
CPBI 15 18 23 11 12 17 16 21 25 15 17 16 21 30 20
GRLM 11 16 23 12 13 12 24 34 45 13 20 13 18 29 16
MTLM 6 12 16 9 5 (3) 16 35 68 10 19 12 22 21 11
Source: Bloomberg, Systematix Institutional Research
Building Materials - Stock price performance
1-month 3-month 6-month 12-month 3-years
Pipes
FNXP 27 62 64 111 102
SI 14 53 35 113 167
APOLP 11 (1) (5) (5) 90
PRINCPIP 1 18 (8) (0) (9)
ASTRA 0 6 12 9 49
Tiles/Ceramics
SOMC 16 21 (3) 11 55
CRS 9 1 (11) (7) 69
KJC 5 1 (9) (2) 21
CARYSIL (2) (12) (1) 43 60
Wood Panel
MTLM 19 19 38 75 29
GRLM 10 20 9 50 131
GREENP 7 (8) (11) (5) 30
SYIL 4 8 (8) (7) 74
CPBI 4 5 (10) 19 65
RDL 3 4 (14) 2 12
Source: BSE
PVC Pipes - 4QFY24 Review - Company-wise quarterly results
(Rs mn) 1QFY23 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 YoY (%) QoQ (%)
Pipes (consolidated)
Revenue 54,317 50,431 56,458 62,619 56,447 54,607 56,792 68,641 10 21
EBITDA 6,293 1,399 6,672 11,844 7,471 7,976 8,006 11,103 (6) 39
EBITDA margin (%) 11.6 2.8 11.8 18.9 13.2 14.6 14.1 16.2
PAT 4,268 271 4,228 8,408 4,842 5,559 5,118 7,627 (9) 49
Pipes revenue 42,944 37,763 44,602 50,128 45,325 42,527 44,735 55,556 11 24
Pipes volume ('000 Kgs) 2,33,618 2,33,115 3,02,068 3,11,185 3,15,779 2,79,254 3,17,582 3,96,887 28 25
NSR (Rs /Kg) 184 162 148 161 144 152 141 140 (13) (1)
APOLP
Revenue 2,189 2,070 2,367 2,519 2,603 2,495 2,216 2,556 1 15
EBITDA 200 25 161 294 262 241 201 254 (14) 26
EBITDA margin (%) 9.2 1.2 6.8 11.7 10.1 9.7 9.1 9.9
PAT 88 (48) 49 150 139 129 91 67 (55) (26)
Pipes volume ('000 Kgs) 14,406 15,465 18,011 18,685 21,219 19,803 18,868 20,550 10 9
NSR (Rs /Kg) 152 134 131 135 123 126 117 124 (8) 6
EBITDA /kg 14 2 9 16 12 12 11 12 (21) 16
ASTRA
Revenue 12,129 11,716 12,678 15,062 12,831 13,630 13,702 16,251 8 19
EBITDA 1,706 1,440 1,864 3,089 2,016 2,201 2,051 2,915 (6) 42
EBITDA margin (%) 14.1 12.3 14.7 20.5 15.7 16.1 15.0 17.9
PAT 889 691 930 2,057 1,198 1,312 1,135 1,816 (12) 60
Pipes revenue 8,761 8,361 9,318 11,235 9,383 9,804 9,981 12,252 9 23
Pipes volume ('000 Kgs) 36,578 40,753 45,859 54,438 47,950 52,079 52,734 66,827 23 27
NSR (Rs /Kg) 240 205 203 206 196 188 189 183 (11) (3)
EBITDA /kg 36 28 31 47 34 34 31 37 (20) 20
Pipes EBITDA margin (%) 14.8 13.5 15.4 22.8 17.6 18.0 16.5 20.4
Adhesives and Paints revenue 3,368 3,355 3,360 3,827 3,448 3,826 3,721 3,999 4 7
Adhesives and Paints EBITDA
15.4 12.6 12.2 15.1 14.0 14.8 12.5 12.9 (15.0) 2.6
margin (%)
Adhesives revenue 2,815 2,855 2,840 3,200 3,038 3,356 3,251 3,499 9 8
Adhesives EBITDA margin (%) 15.5 12.4 12.1 15.0 13.6 14.7 11.7 13.6
Paints Revenue 553 500 520 627 410 470 470 500 (20) 6
Paints EBITDA margin (%) 15.0 13.9 12.6 16.0 17.0 16.0 18.5 7.3
Bathware revenue - - 100 125 139 140 140 242 94 73
EBITDA - - (130) (35) (34) (41) (40) (65) 86 63
Bathware EBITDA margin (%) - - (130) (28) (24) (29) (29) (27)
FNXP
Revenue 11,898 9,414 11,248 11,411 11,792 8,832 10,197 12,354 8 21
EBITDA 1,259 (1,424) 919 2,174 1,525 1,030 1,199 2,089 (4) 74
EBITDA margin (%) 10.6 (15.1) 8.2 19.1 12.9 11.7 11.8 16.9
PAT 992 (951) 795 1,665 1,153 980 954 1,649 (1) 73
Pipes volume ('000 Kgs) 71,960 59,219 90,396 81,452 92,181 62,914 81,312 1,00,171 23 23
Pipes revenue 11,320 8,020 10,772 11,021 11,542 8,572 9,916 11,822 7 19
NSR (Rs /Kg) 157 135 119 135 125 136 122 118 (13) (3)
EBIT /kg 6 (8) 8 11 14 11 9 13 20 45
Pipes EBIT margin (%) 3.8 (5.9) 6.4 8.2 11.0 7.9 7.5 11.2
PVC volume ('000 Kgs) 62,747 54,063 64,697 58,132 46,074 37,516 43,738 69,215 19 58
PVC revenue 7,846 4,811 5,041 5,013 3,594 2,979 3,211 5,075 1 58
NSR (Rs /Kg) 125 89 78 86 78 79 73 73 (15) (0)
EBIT /kg 12 (20) 2 20 1 5 7 9 (53) 34
PVC EBIT margin (%) 9.3 (23.0) 2.5 23.4 0.9 6.8 9.6 12.9
PRINCPIP
Revenue 6,041 6,365 7,059 7,644 5,536 6,565 6,186 7,401 (3) 20
EBITDA 439 (113) 695 1,483 453 942 767 938 (37) 22
EBITDA margin (%) 7.3 (1.8) 9.8 19.4 8.2 14.3 12.4 12.7
PAT 160 (241) 354 941 196 706 376 546 (42) 45
Pipes volume ('000 Kgs) 31,250 38,458 43,693 44,317 37,155 41,529 42,665 51,444 16 21
NSR (Rs /Kg) 193 166 162 172 149 158 145 144 (17) (1)
EBITDA /kg 14 (3) 16 33 12 23 18 18 (46) 1
Pipes EBITDA margin (%) 7.3 (1.8) 9.8 19.4 8.2 14.3 12.5 12.7
Bathware revenue - - - - - - 60.0 40.0 (33.3)
Bathware EBITDA margin (%) - - - - - - (16.7) (37.5)
SI
Revenue 22,060 20,866 23,107 25,983 23,686 23,087 24,491 30,079 16 23
EBITDA 2,689 1,471 3,034 4,803 3,216 3,562 3,788 4,907 2 30
EBITDA margin (%) 12.2 7.1 13.1 18.5 13.6 15.4 15.5 16.3
PAT 2,139 820 2,100 3,594 2,155 2,432 2,562 3,548 (1) 39
Pipes volume ('000 Kgs) 79,424 79,220 1,04,109 1,12,293 1,17,274 1,02,929 1,22,003 1,57,895 41 29
Pipes revenue 14,633 12,947 15,087 17,708 16,261 15,093 16,437 21,525 22 31
NSR (Rs /Kg) 184 163 145 158 139 147 135 136 (14) 1
EBIT /kg 19 3 16 29 17 19 17 19 (37) 6
Pipes EBIT margin (%) 10.6 1.9 11.3 18.6 11.9 13.3 13.0 13.6
Excl. pipes volume ('000 Kgs) 29,498 32,583 34,253 35,121 31,270 34,834 36,022 36,574 4 2
Excl. pipes revenue 7,426 7,919 8,020 8,275 7,425 7,994 8,055 8,554 3 6
NSR (Rs /Kg) 252 243 234 236 237 229 224 234 (1) 5
EBIT /kg 20 19 22 24 20 26 26 35 45 32
Excl. pipes EBIT margin (%) 7.9 8.0 9.2 10.2 8.4 11.3 11.8 14.9
Source: Company, Systematix Institutional Research
Tile & Bathware - 4QFY24 Review - Company-wise quarterly results
Tiles/Bathware (consol.)
Revenue 21,359 22,507 23,092 25,652 22,213 24,034 23,908 27,177 6 14
EBITDA 2,951 2,620 2,737 3,536 3,163 3,532 3,345 3,810 8 14
EBITDA margin (%) 13.8 11.6 11.9 13.8 14.2 14.7 14.0 14.0
PAT 1,710 1,445 1,547 2,075 1,899 2,096 1,926 2,237 8 16
CARYSIL
Revenue 1,713 1,392 1,378 1,456 1,417 1,636 1,880 1,905 31 1
EBITDA 337 224 250 262 261 329 352 345 32 (2)
EBITDA margin (%) 19.7 16.1 18.2 18.0 18.4 20.1 18.7 18.1
PAT 187 92 121 124 116 154 153 155 25 1
Quartz Sink 1,050 704 622 712 650 867 979 950 33 (3)
Steel Sink 164 209 210 189 166 213 159 215 13 35
Appliances and Others 162 148 138 205 177 162 223 190 (7) (15)
Solid Surface (STL UK) 337 331 408 409 425 393 519 551 35 6
CRS
Revenue 3,972 4,159 4,578 5,356 4,289 4,631 4,389 5,488 2 25
EBITDA 628 679 750 905 704 765 614 950 5 55
EBITDA margin (%) 15.8 16.3 16.4 16.9 16.4 16.5 14.0 17.3
PAT 395 507 564 628 563 569 509 749 19 47
Sanitaryware revenue 2,120 2,254 2,461 2,827 2,277 2,350 2,267 2,771 (2) 22
Faucets revenue 1,365 1,417 1,504 1,867 1,478 1,639 1,594 2,072 11 30
Tiles & Wellness 473 472 593 640 517 628 504 620 (3) 23
KJC
Revenue 10,082 10,778 10,911 12,048 10,642 11,216 11,518 12,408 3 8
EBITDA 1,536 1,294 1,331 1,759 1,692 1,797 1,788 1,720 (2) (4)
EBITDA margin (%) 15.2 12.0 12.2 14.6 15.9 16.0 15.5 13.9
PAT 923 699 743 1,080 1,075 1,080 1,042 1,024 (5) (2)
Power & Fuel cost (Rs/ scm) 152 141 145 115 105 113 116 95 (17) (18)
Tiles volume (mn sqm) 23 25 25 28 25 26 27 30 6 9
Tiles revenue 9,087 9,745 9,839 10,841 9,692 9,872 10,128 10,917 1 8
Tiles NSR (Rs /sqm) 390 391 387 387 387 373 374 369 (5) (1)
Sanitary ware / Faucets 714 744 795 904 837 853 922 1,023 13 11
Plywood 203 194 188 188 143 235 340 327 74 (4)
Adhesives 77 97 90 115 96 130 128 143 24 12
SOMC
Revenue 5,591 6,178 6,224 6,792 5,865 6,552 6,121 7,375 9 20
EBITDA 449 422 406 610 506 641 590 795 30 35
EBITDA margin (%) 8.0 6.8 6.5 9.0 8.6 9.8 9.6 10.8
PAT 205 147 120 243 146 293 222 308 27 39
Power & Fuel cost (Rs/ scm) 159 140 125 119 104 118 110 104 (12) (5)
Tiles volume (mn sqm) 14.3 15.9 16.2 17.6 15.4 16.9 15.8 18.9 7 20
Tiles revenue 4,799 5,418 5,431 5,835 5,075 5,631 5,163 6,115 5 18
Tiles NSR (Rs /sqm) 337 341 336 332 329 333 328 324 (2) (1)
Bathware 531 545 580 742 582 640 653 796 7 22
Others 70 99 107 107 117 144 153 183 70 20
Woodpanel - 4QFY24 Review - Company-wise quarterly results
Wood Panel (consol.)
Revenue 25,119 26,250 24,696 26,047 24,942 28,409 26,832 29,151 12 9
EBITDA 4,005 3,819 3,474 3,996 3,349 3,875 3,357 3,885 (3) 16
EBITDA margin (%) 15.9 14.5 14.1 15.3 13.4 13.6 12.5 13.3
PAT 2,363 2,435 2,082 2,674 1,857 2,226 1,812 2,163 (19) 19
CPBI
Revenue 8,888 9,086 8,837 9,654 8,910 9,968 9,374 10,607 10 13
EBITDA 1,431 1,230 1,287 1,638 1,332 1,443 1,061 1,483 (9) 40
EBITDA margin (%) 16.1 13.5 14.6 17.0 14.9 14.5 11.3 14.0
PAT 923 941 822 1,147 869 969 631 795 (31) 26
Plywood volume (cbm) 88,015 87,547 87,606 98,273 87,869 94,361 90,229 1,04,787 7 16
Plywood revenue 4,735 4,856 4,814 5,665 4,875 5,390 5,089 6,037 7 19
NSR (Rs /cbm) 53,802 55,464 54,945 57,640 55,476 57,121 56,398 57,613 (0) 2
EBITDA (Rs /cbm) 5,701 7,828 6,760 9,110 7,476 7,613 5,371 8,749 (4) 63
Plywood EBITDA margin 10.6 14.1 12.3 15.8 13.4 13.3 9.5 15.1
MDF volume (cbm) 45,309 45,109 48,100 46,802 47,988 53,724 55,376 62,885 34 14
MDF revenue 1,556 1,568 1,668 1,610 1,669 1,967 1,876 1,972 22 5
NSR (Rs /cbm) 34,344 34,751 34,672 34,400 34,774 36,608 33,870 31,359 (9) (7)
EBITDA (Rs /cbm) 11,987 8,763 7,759 9,297 9,096 9,692 6,499 5,184 (44) (20)
MDF EBITDA margin (%) 34.9 26.8 23.0 26.0 25.4 26.4 18.9 16.3
Laminate volume (mn sheets) 1.8 1.9 1.7 1.8 1.8 2.1 1.9 1.9 5 (2)
Laminate revenue 1,619 1,740 1,563 1,590 1,547 1,702 1,599 1,649 4 3
NSR (Rs /sheet) 876 901 947 896 841 827 839 883 (1) 5
EBITDA (Rs /sheet) 118 158 136 128 85 97 104 92 (28) (11)
Laminate EBITDA margin (%) 12.7 16.6 14.8 13.5 9.2 11.2 12.1 9.6
GRLM
Revenue 4,706 5,180 5,035 5,338 5,152 6,036 5,634 6,241 17 11
EBITDA 504 537 548 741 644 756 711 835 13 17
EBITDA margin (%) 10.7 10.4 10.9 13.9 12.5 12.5 12.6 13.4
PAT 247 292 283 460 329 390 253 410 (11) 62
Laminate volume (mn sheets) 4.1 4.3 4.3 4.7 4.2 4.9 4.7 5.2 12 12
NSR (Rs /sheet) 1,044 1,106 1,078 1,053 1,132 1,077 1,075 1,026 (3) (4)
EBITDA (Rs /sheet) 130 134 134 164 168 177 170 171 4 0
GREENP
Revenue 4,640 4,573 4,202 4,414 3,862 3,987 3,857 3,966 (10) 3
EBITDA 1,315 1,167 920 762 658 691 603 513 (33) (15)
EBITDA margin (%) 28.3 25.5 21.9 17.3 17.0 17.3 15.6 12.9
PAT 776 725 375 689 373 410 346 298 (57) (14)
MDF volume (cbm) 1,25,029 1,26,232 1,18,218 1,37,265 1,15,798 1,23,615 1,18,301 1,27,238 (7) 8
MDF revenue 3,919 3,951 3,616 3,860 3,402 3,545 3,466 3,604 (7) 4
NSR (Rs /cbm) 31,345 31,299 30,585 28,122 29,376 28,679 29,300 28,326 1 (3)
EBITDA (Rs /cbm) 10,438 9,515 7,830 6,103 5,993 6,080 5,743 4,645 (24) (19)
Plywood volume (mn sqm) 2.5 2.0 2.0 2.0 1.6 1.6 1.5 1.4 (30) (8)
Plywood revenue 709 610 575 546 450 432 384 357 (35) (7)
NSR (Rs /sqm) 282 299 289 267 285 263 249 251 (6) 1
EBITDA (Rs /sqm) 32 22 20 1 17 4 (10) (26)
Plywood EBITDA margin (%) 11.5 7.3 7.0 0.4 5.9 1.6 (4.1) (10.5)
MTLM
Revenue 4,535 4,947 4,282 4,272 4,761 6,077 5,821 5,998 40 3
EBITDA 401 489 326 450 298 513 504 577 28 14
EBITDA margin (%) 8.8 9.9 7.6 10.5 6.3 8.4 8.7 9.6
PAT 207 236 360 111 8 139 269 284 156 6
Plywood volume (mn sqm) 17.1 16.0 17.0 16.4 17.0 16.3 16.5 17.8 8 8
Plywood revenue 3,950 4,360 4,050 4,270 4,120 4,780 4,540 4,680 10 3
NSR (Rs /sqm) 231 273 238 260 242 293 275 263 1 (4)
EBITDA (Rs /sqm) 21 23 23 27 21 19 20 21 (21) 5
Plywood EBITDA margin (%) 8.4 8.9 9.4 10.7 8.3 7.6 7.9 8.5
MDF volume (cbm) - - - - 6,062 31,019 41,928 45,764 9
MDF revenue - - - - 170 890 1,280 1,310 2
NSR (Rs /cbm) - - - - 28,044 28,692 30,529 28,625 (6)
EBITDA (Rs /cbm) - - - - (11,547) 4,513 3,601 4,042 12
MDF EBITDA margin (%) - - - - (41.2) 15.7 11.8 14.1
RDL
Revenue 2,108 2,034 2,103 2,139 1,928 2,046 2,131 2,334 9 10
EBITDA 475 471 265 282 289 292 307 292 4 (5)
EBITDA margin (%) 22.5 23.2 12.6 13.2 15.0 14.3 14.4 12.5
PAT 272 267 102 136 122 106 114 90 (34) (21)
MDF volume (cbm) 58,745 54,344 57,310 66,179 59,089 60,413 65,896 74,982 13 14
MDF revenue 1,608 1,490 1,528 1,588 1,469 1,498 1,582 1,785 12 13
NSR (Rs /cbm) 27,379 27,419 26,662 23,993 24,854 24,788 24,011 23,806 (1) (1)
EBITDA (Rs /cbm) 7,516 8,151 3,575 3,823 4,203 4,154 3,852 3,368 (12) (13)
Laminate revenue 476 528 560 519 418 492 495 501 (3) 1
NSR (Rs /sheet) 749 725 720 701 687 636 671 642 (8) (4)
EBITDA (Rs /sheet) 49 42 81 42 60 67 71 54 28 (24)
SYIL
Revenue 2,350 2,463 2,340 2,368 2,257 2,339 2,146 2,399 (1) 12
EBITDA 353 396 394 405 418 473 478 477 18 (0)
EBITDA margin (%) 15.0 16.1 16.8 17.1 18.5 20.2 22.3 20.4
PAT 210 242 240 268 278 318 313 376 40 20
NSR (Rs /sheet) 856 751 749 827 776 716 744 770 (7) 4
EBITDA (Rs /sheet) 131 124 131 148 149 150 171 157 6 (8)
PVC Pipes – Change in estimates + Variance with Bloomberg estimates
Estimates before Estimates after Bloomberg % Var vs.
% Var New Estimates % Var
(Rs mn) 4QFY24 result 4QFY24 result estimates Systematix
FY25 FY26 FY25 FY26 FY25 FY26 FY25 FY26 FY25 FY26 FY25 FY26 FY25 FY26
APOLP
Revenue 13,247 17,566 13,087 17,353 (1) (1) 13,087 17,353 - - 13,597 17,361 4 0
EBITDA 1,310 1,825 1,310 1,824 0 (0) 1,310 1,824 - - 1,342 1,832 2 0
EBITDA margin (%) 9.9 10.4 10.0 10.5 10.0 10.5 9.9 10.6
PAT 701 1,045 692 1,045 (1) 0 692 1,045 - - 698 984 1 (6)
EPS 18 27 18 27 18 27 16 23
ASTRA
Revenue 67,466 78,952 66,228 77,637 (2) (2) 65,904 77,884 (0) 0 68,223 81,218 4 4
EBITDA 12,090 14,543 11,310 13,802 (6) (5) 11,173 13,749 (1) (0) 11,978 14,566 7 6
EBITDA margin (%) 17.9 18.4 17.1 17.8 17.0 17.7 17.6 17.9
PAT 7,739 9,533 7,178 9,105 (7) (4) 7,074 9,042 (1) (1) 7,453 9,319 5 3
EPS 29 35 27 34 26 34 27 35
FNXP
Revenue 51,320 61,415 48,941 57,731 (5) (6) 48,941 57,731 - - 48,547 54,420 (1) (6)
EBITDA 7,605 8,917 7,700 9,083 1 2 7,700 9,083 - - 7,455 8,565 (3) (6)
EBITDA margin (%) 14.8 14.5 15.7 15.7 15.7 15.7 15.4 15.7
PAT 5,825 6,950 5,996 7,196 3 4 5,996 7,196 - - 5,967 7,027 (0) (2)
EPS 9 11 10 12 10 12 10 11
PRINCPIP
Revenue 29,012 34,421 29,682 35,503 2 3 29,688 35,517 0 0 28,966 33,722 (2) (5)
EBITDA 3,990 4,861 3,986 5,126 (0) 5 3,986 5,128 0 0 3,785 4,625 (5) (10)
EBITDA margin (%) 13.8 14.1 13.4 14.4 13 14 13.1 13.7
PAT 2,276 2,886 2,255 3,073 (1) 6 2,255 3,075 0 0 2,123 2,690 (6) (13)
EPS 21 26 20 28 20 28 19 24
SI
Revenue (Rs bn) 117 138 1,21 1,43 4 4 121 143 - - 120 139 (1) (3)
EBITDA 18,019 21,648 18,797 22,583 4 4 18,797 22,583 - - 18,907 22,247 1 (1)
EBITDA margin (%) 15.4 15.6 15.5 15.7 15 16 0.0 0.0
PAT 12,314 14,882 12,910 15,441 5 4 12,910 15,441 - - 13,194 15,512 2 0
EPS 97 117 102 122 102 122 103 122
Tiles & Bathware - Change in estimates + Variance with Bloomberg estimates
CARYSIL
Revenue 9,232 11,317 9,052 11,154 (2) (1) 9,052 11,154 - - 8,743 10,463 (3) (6)
EBITDA 1,917 2,350 1,795 2,234 (6) (5) 1,795 2,234 - - 1,699 2,074 (5) (7)
EBITDA margin (%) 20.8 20.8 19.8 20.0 20 20 19.4 19.8
PAT 1,050 1,327 943 1,230 (10) (7) 943 1,230 - - 888 1,148 (6) (7)
EPS 39 50 35 46 35 46 33 44
CRS
Revenue 20,708 23,184 21,042 23,767 2 3 21,042 23,767 - - 20,798 23,710 (1) (0)
EBITDA 3,347 3,739 3,345 3,789 (0) 1 3,345 3,789 - - 3,370 3,899 1 3
EBITDA margin (%) 16.2 16.1 15.9 15.9 16 16 16.2 16.4
PAT 2,550 2,855 2,550 2,855 (0) 0 2,550 2,855 - - 2,630 3,047 3 7
EPS 196 220 196 220 196 220 203 234
KJC
Revenue 52,031 59,069 51,056 57,456 (2) (3) 51,056 57,456 - - 51,219 58,093 0 1
EBITDA 8,283 9,522 7,956 9,125 (4) (4) 7,956 9,125 - - 8,107 9,536 2 5
EBITDA margin (%) 15.9 16.1 15.6 15.9 16 16 15.8 16.4
PAT 5,044 5,940 4,788 5,612 (5) (6) 4,788 5,612 - - 5,046 6,071 5 8
EPS 32 37 30 35 30 35 32 38
SOMC
Revenue 28,682 32,183 28,844 32,339 1 0 28,844 32,339 - - 28,387 32,104 (2) (1)
EBITDA 2,873 3,385 2,963 3,483 3 3 2,963 3,483 - - 2,911 3,416 (2) (2)
EBITDA margin (%) 10.0 10.5 10.3 10.8 10 11 10.3 10.6
PAT 1,415 1,783 1,405 1,810 (1) 1 1,405 1,810 - - 1,349 1,730 (4) (4)
EPS 33 42 34 44 34 44 33 42
Woodpanel - Change in estimates + Variance with Bloomberg estimates
CPBI
Revenue 44,082 51,030 44,979 52,158 2 2 44,979 52,158 - - 44,536 53,083 (1) 2
EBITDA 6,425 7,804 6,245 7,768 (3) (0) 6,245 7,768 - - 6,069 7,883 (3) 1
EBITDA margin (%) 14.6 15.3 13.9 14.9 14 15 13.6 14.9
PAT 3,893 4,841 3,965 5,128 2 6 3,965 5,128 - - 3,619 4,921 (9) (4)
EPS 17 22 18 23 18 23 20 26
GRLM
Revenue 31,233 36,346 29,963 35,693 (4) (2) 29,963 35,693 - - 28,623 34,809 (4) (2)
EBITDA 4,030 5,017 4,008 5,310 (1) 6 4,008 5,310 - - 3,775 4,824 (6) (9)
EBITDA margin (%) 12.9 13.8 13.4 14.9 13 15 13.2 13.9
PAT 2,085 2,800 2,023 2,924 (3) 4 2,023 2,924 - - 1,710 2,483 (15) (15)
EPS 16 22 16 23 16 23 13 19
GREENP
Revenue 18,239 21,496 17,114 20,009 (6) (7) 17,114 20,009 - - 17,283 20,796 1 4
EBITDA 3,336 4,232 3,034 3,907 (9) (8) 3,034 3,907 - - 2,737 3,839 (10) (2)
EBITDA margin (%) 18.3 19.7 17.7 19.5 18 20 15.8 18.5
PAT 1,859 2,505 1,711 2,362 (8) (6) 1,711 2,362 - - 1,491 2,223 (13) (6)
EPS 15 20 14 19 14 19 12 18
MTLM
Revenue 27,164 30,646 25,918 29,387 (5) (4) 25,918 29,387 - - 24,980 27,969 (4) (5)
EBITDA 2,839 3,488 2,739 3,379 (4) (3) 2,739 3,379 - - 2,638 3,265 (4) (3)
EBITDA margin (%) 10.5 11.4 10.6 11.5 11 11 10.6 11.7
PAT 1,470 1,950 1,498 1,968 2 1 1,498 1,968 - - 1,280 1,807 (15) (8)
EPS 12 16 12 16 12 16 11 15
SYIL
Revenue 11,396 14,147 11,386 14,213 (0) 0 11,386 14,213 - - 11,551 13,458 1 (5)
EBITDA 2,321 2,881 2,219 2,713 (4) (6) 2,219 2,713 - - 2,229 2,679 0 (1)
EBITDA margin (%) 20.4 20.4 19.5 19.1 19 19 19.3 19.9
PAT 1,535 1,973 1,462 1,846 (5) (6) 1,462 1,846 - - 1,451 1,821 (1) (1)
EPS 91 116 86 109 86 109 89 110

2
5
7
10
12
8
0
23
31
16
0
90
45
180
135
225
3,000
4,500
6,000
0
1,500
(Rs bn)
(Rs bn)
(Rs bn)
(Rs mn)
FY16 5.9 FY16 9.9
FY16 9
Source: DGFT
FY16 782
11 June 2024
FY17 5.6 FY17 10.3

FY17 14
FY17 1,008
FY18 7.8 FY18 11.2

FY18 57
FY18 1,178
FY19 75 FY19 7.9 FY19 14.9

FY19 1,576
FY20 100 FY20 6.9 FY20 14.8

FY20 2,418
FY21 121 FY21 3.9 FY21 15.8
Exhibit 9: India’s tiles exports – annual trend

FY21 2,288
Exhibit 5: India’s MDF exports – annual trend
Exhibit 7: India's MDF imports – annual trend

Exhibit 3: India's laminates exports – annual trend
FY22 127 FY22 4.3 FY22 4,035 FY22 20.3
FY23 160 FY23 7.2 FY23 4,817 FY23 23.0

Export-Import statistics in MDF, Laminates and Tiles
FY24 202 FY24 10.2 FY24 4,933 FY24 25.6
0
12
18
24
1,600
0
1,200
400
800
0
1,000
250
500
750
1,200
1,600
2,000
2,400
2,800
(Rs bn)
(Rs mn)
(Rs mn)
(Rs mn)
Mar-23 17.7
Mar-23 805 Mar-23 472 Mar-23 2,127
Apr-23 16.3
Apr-23 771 Apr-23 288 Apr-23 1,937
Systematix Research is also available on Bloomberg SSSL <Go>, Thomson & Reuters
May-23 17.7
May-23 731 May-23 425 May-23 1,984
Jun-23 13.1
Jun-23 711 Jun-23 606 Jun-23 1,924
Jul-23 19.7
Jul-23 988 Jul-23 415 Jul-23 2,107
Aug-23 20.4
Aug-23 1,313 Aug-23 361 Aug-23 2,378
Sep-23 17.8
Sep-23 940 Sep-23 485 Sep-23 1,971
Oct-23 18.0
Oct-23 896 Oct-23 447 Oct-23 2,078
Nov-23 15.2
Exhibit 6: India’s MDF exports – monthly trend
Nov-23 872 Nov-23 422 Nov-23 1,901

Exhibit 8: India's MDF imports – monthly trend
Exhibit 10: India’s tiles exports – monthly trend

Dec-23 16.0
Dec-23 856 Dec-23 370 Dec-23 2,460
Exhibit 4: India's laminates exports – monthly trend
Jan-24 13.9
Jan-24 946 Jan-24 424 Jan-24 2,186
Feb-24 16.5
Feb-24 874 Feb-24 350 Feb-24 2,172
Mar-24 17.2
Mar-24 254 Mar-24 340 Mar-24 2,467
Systematix Shares and Stocks (India) Limited

Building Materials
14
Commodity prices, currency movement
Exhibit 11: Price of polyvinyl chloride (PVC) Exhibit 12: Price of polypropylene (PP)
(Rs per kg) (Rs per kg)
180 160
Change:
1m: 11%
135 3m: 13% 120
12m: 10%
90 80
Change:
1m: 1%
45 40 3m: 1%
12m: 8%
0 0
Jun-24
Dec-20
Dec-21
Apr-20
Aug-21
Aug-20
Apr-21
Sep-22
Sep-23
Jan-23
May-22
May-23
Jan-24
Apr-20
Dec-23
Jun-24
Jul-22
Jul-23
Sep-20
Feb-22
Aug-21
Mar-21
Jan-23
Polyvinyl Chloride (PVC) price Polypropylene (PP) price
Source: Reliance Source: Reliance
Exhibit 13: PVC - EDC spread Exhibit 14: USD-INR rate

(USD/t)
Change: 88
1,000 1m: 13%
3m: 24%
750 12m: 21% 83
500 78
Change:
1m: 0%
250 73 3m: 0%
12m: 1%
0 68
Dec-23
Jun-24
Jul-23
Sep-20
Aug-21
Jul-22
Apr-20
Feb-22
Mar-21
Jan-23
Jun-24
Dec-21
Apr-21
Apr-22
Sep-23
Aug-21
Aug-22
May-23
Jan-23
Jan-24
USD-INR rate
PVC - EDC spread
Source: Bloomberg Source: Bloomberg
Exhibit 15: Morbi gas price trend

(Rs/ scm)
80
69.0
63.0
65 58.0 58.0 58.0
53.0
47.0 47.0 46.0 47.5 45.6 45.6
50 43.3 42.1
40.6 40.9
37.5 38.4
33.1
35 28.2
24.2
20
24-Aug-21
05-Jan-21
21-Aug-23
4-Jan-23
Dec-20
1-Sep-23
01-Nov-21
05-Jun-22
12-Dec-22
1-May-23
1-Mar-24
1-Jun-23
1-Nov-23
Sep-20
05-Oct-21
16-Oct-21
23-Feb-23
Jan-21
23-Mar-22
01-May-22
1-Apr-23
Source: Gujarat Gas, media reports
PVC Pipes - PE band and standard deviation (one-year forward)
PVC Pipes
APOLP ASTRA
120 140
90 105
+1 SD 89
60 +1 SD 62 70 Mean 69
Mean 39 -1 SD 49
30 35
-1 SD 16
0 0
Feb-21
Jun-19
Dec-19
Nov-23
Jun-24
Jul-20
Oct-22
Aug-21
Mar-22
May-23
Dec-19
Nov-23
Mar-22
Jun-19
Jun-24
Jul-20
Oct-22
Feb-21
Aug-21
May-23
P/E Mean +1 SD -1 SD P/E Mean +1 SD -1 SD
FNXP PRINCPIP
45 68
51 +1 SD 48
30
+1 SD 27
34 Mean 34
15 Mean 18
17 -1 SD 20
-1 SD 9
0 0
Jun-19
Dec-19
Aug-21
Nov-23
Jun-24
Jul-20
Oct-22
Feb-21
Mar-22
May-23
Dec-20
Dec-21
Dec-22
Dec-23
Jun-23
Jun-20
Jun-21
Jun-22
Jun-24
SI
68
51
34 +1 SD 38
Mean 29
17 -1 SD 19
0
May-23
Jun-19
Dec-19
Nov-23
Jun-24
Jul-20
Oct-22
Feb-21
Aug-21
Mar-22
P/E Mean +1 SD -1 SD
Source: BSE, Company, Systematix Institutional Research
Tiles & Bathware - PE band and standard deviation (one-year forward)
Tiles & Bathware
CARYSIL CRS
50 58
38 49
+1 SD 31
25 39 +1 SD 39
Mean 21
Mean 33
13 30
-1 SD 10 -1 SD 28
0 20
Jun-19
Jun-24
Nov-23
Dec-19
Feb-21
Jul-20
Oct-22
Aug-21
May-23
Mar-22
Dec-19
Jul-20
Jun-19
Nov-23
Jun-24
Mar-22
Oct-22
Feb-21
Aug-21
May-23
KJC SOMC
75 90
56 68
+1 SD 50
38 Mean 40 45
+1 SD 39
-1 SD 29
19 23 Mean 26
-1 SD 13
0 0
Jun-19
Jun-24
Nov-23
Dec-19
Jul-20
Oct-22
Feb-21
May-23
Aug-21
Mar-22
Dec-19
Jul-20
Jun-19
Nov-23
Jun-24
Oct-22
Feb-21
Mar-22
Aug-21
May-23

Woodpanel - PE band and standard deviation (one-year forward)
Wood Panel
CPBI GRLM
60 48
45 39
+1 SD 39 +1 SD 36
30 Mean 29 30 Mean 30
-1 SD 19 -1 SD 24
15 21
0 12
Jun-19
Jun-24
Nov-23
Dec-19
Oct-22
Jul-20
Feb-21
Aug-21
May-23
Mar-22
Jun-19
Dec-19
Oct-22
Nov-23
Jun-24
Jul-20
Feb-21
Apr-23
Aug-21
Mar-22

GREENP MTLM
38 45
29 34
+1 SD 27 +1 SD 30
19 23 Mean 24
Mean 18
-1 SD 18
10 -1 SD 9 11
0 0
Jun-19
Dec-19
Aug-21
Nov-23
Jun-24
Jul-20
Oct-22
Feb-21
Apr-23
Mar-22
Nov-21
Nov-22
Nov-23
Jun-24
Oct-19
Oct-20
Apr-20
May-21
May-22
May-23

SYIL
38
29
+1 SD 21
19
Mean 16
10 -1 SD 10
0
Jun-19
Dec-19
Aug-21
Nov-23
Jun-24
Jul-20
Oct-22
Feb-21
Mar-22
May-23
Building Materials – Detailed financial peer comparison
CAGR (%)
FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY24-26E FY20-24
Revenue (Rs bn)
Pipes
ASTRA 25.8 31.8 43.9 51.6 56.4 65.9 77.9 17 22
SI 55.1 63.6 77.7 92.0 101.3 121.4 143.8 19 16
FXNP 29.8 34.6 46.5 44.0 43.2 48.9 57.7 16 10
PRINCPIP 16.4 20.7 26.6 27.1 25.7 29.7 35.5 18 12
APOLP 4.1 5.2 7.8 9.1 9.9 13.1 17.4 33 25
Total - Pipes 131.2 155.8 202.6 223.8 236.5 279.0 332.3 19 16
Wood Panel
CPBI 23.2 21.3 30.3 36.5 38.9 45.0 52.2 16 14
MTLM 14.2 11.7 15.6 16.6 21.8 25.9 29.4 16 11
GRLM 13.2 12.0 17.0 20.3 23.1 30.0 35.7 24 15
SYIL 4.6 4.8 6.6 9.5 9.1 11.4 14.2 25 19
GREENP 8.8 10.2 16.3 17.8 15.7 17.1 20.0 13 16
Total - Wood Panel 64.0 60.0 85.8 100.7 108.5 129.4 151.5 18 14
Tiles/Ceramics
KJC 28.1 27.8 37.1 43.8 45.8 51.1 57.5 12 13
CRS 12.2 12.2 14.5 18.1 18.8 21.0 23.8 12 11
SOMC 16.1 16.5 20.9 24.8 25.9 28.8 32.3 12 13
CARYSIL 2.8 3.1 4.8 5.9 6.8 9.1 11.2 28 25
Total - Tiles/ Ceramics 59.2 59.7 77.3 92.6 97.3 110.0 124.7 13 13
EBITDA (Rs mn)
Pipes
ASTRA 4,429 6,445 7,553 8,099 9,183 11,173 13,749 22 20
SI 8,346 12,842 12,421 11,996 15,473 18,797 22,583 21 17
FXNP 4,474 9,893 10,237 2,925 5,843 7,700 9,083 25 7
PRINCPIP 2,288 3,616 4,156 2,503 3,074 3,986 5,128 29 8
APOLP 464 743 934 680 958 1,310 1,824 38 20
Total - Pipes 20,000 33,539 35,302 26,204 34,532 42,966 52,367 23 15
Wood Panel
CPBI 3,307 3,355 5,308 5,587 5,319 6,245 7,768 21 13
MTLM 1,556 1,167 1,503 1,541 1,868 2,739 3,379 35 5
GRLM 1,782 1,733 1,870 2,329 2,947 4,008 5,310 34 13
SYIL 796 990 1,037 1,548 1,845 2,219 2,713 21 23
GREENP 1,378 2,034 4,304 4,165 2,465 3,034 3,907 26 16
Total - Wood Panel 8,820 9,279 14,022 15,170 14,443 18,245 23,076 26 13
Tiles/Ceramics
KJC 4,159 5,088 6,107 5,920 6,997 7,956 9,125 14 14
CRS 1,655 1,581 2,287 3,002 3,033 3,345 3,789 12 16
SOMC 1,314 1,902 2,065 1,887 2,532 2,963 3,483 17 18
CARYSIL 464 658 1,033 1,074 1,287 1,795 2,234 32 29
Total - Tiles/ Ceramics 7,592 9,229 11,493 11,883 13,849 16,058 18,632 16 16
CAGR (%)
FY20 FY21 FY22 FY23 FY24 FY25E FY26E FY24-26E FY20-24
PAT (Rs mn)
Pipes
ASTRA 2,479 4,044 4,839 4,566 5,461 7,074 9,042 29 22
SI 4,674 9,781 9,685 8,652 10,697 12,910 15,441 20 23
FXNP 3,320 7,378 7,505 2,507 4,736 5,996 7,196 23 9
PRINCPIP 1,125 2,218 2,494 1,214 1,825 2,255 3,075 30 13
APOLP 285 445 498 239 426 692 1,045 57 11
Total - Pipes 11,884 23,866 25,020 17,179 23,146 28,927 35,798 24 18
Wood Panel
CPBI 2,017 2,028 3,131 3,762 3,153 3,965 5,128 28 12
MTLM 472 609 947 914 700 1,498 1,968 68 10
GRLM 867 860 930 1,287 1,384 2,023 2,924 45 12
SYIL 186 551 609 960 1,284 1,462 1,846 20 62
GREENP 145 688 2,405 2,565 1,428 1,711 2,362 29 77
Total - Wood Panel 3,687 4,736 8,022 9,489 7,949 10,660 14,228 34 21
Tiles/Ceramics
KJC 2,554 3,081 3,770 3,445 4,221 4,788 5,612 15 13
CRS 1,133 1,008 1,511 2,094 2,390 2,550 2,855 9 21
SOMC 150 570 887 715 969 1,405 1,810 37 59
CARYSIL 229 391 648 524 587 943 1,230 45 27
Total - Tiles/ Ceramics 4,065 5,050 6,815 6,778 8,167 9,686 11,507 19 19
Gross margin (%)
Pipes
ASTRA 38.1 38.0 33.4 33.4 38.7 38.9 39.1
SI 35.1 36.4 31.1 28.3 32.3 33.0 33.3
FXNP 34.9 44.3 38.7 30.1 36.6 38.2 38.2
PRINCPIP 31.1 33.4 28.8 22.8 29.2 30.4 31.2
APOLP 29.2 30.2 26.9 24.2 27.7 27.7 27.9
Wood Panel
CPBI 49.9 51.2 50.4 47.5 47.6 47.5 48.2
MTLM 41.2 41.3 40.2 37.9 39.7 41.7 42.6
GRLM 49.2 49.8 44.6 46.7 52.8 50.9 51.7
SYIL 46.1 48.6 43.0 44.2 48.1 46.8 46.3
GREENP 55.3 54.7 58.7 58.2 55.9 56.4 57.5
Tiles/Ceramics
KJC 60.8 55.2 58.0 58.8 56.8 56.9 57.0
CRS 55.0 48.8 52.7 54.5 53.0 53.7 53.7
SOMC 58.6 52.7 56.1 56.9 53.8 54.3 54.8
CARYSIL 50.3 54.2 56.7 49.1 54.0 54.4 54.6
FY20 FY21 FY22 FY23 FY24 FY25E FY26E

EBITDA margin (%)
Pipes
ASTRA 17.2 20.3 17.2 15.7 16.3 17.0 17.7
SI 15.1 20.2 16.0 13.0 15.3 15.5 15.7
FXNP 15.0 28.6 22.0 6.7 13.5 15.7 15.7
PRINCPIP 14.0 17.5 15.6 9.2 12.0 13.4 14.4
APOLP 11.4 14.3 11.9 7.4 9.7 10.0 10.5
Wood Panel
CPBI 14.3 15.7 17.5 15.3 13.7 13.9 14.9
MTLM 11.0 10.0 9.6 9.3 8.6 10.6 11.5
GRLM 13.5 14.4 11.0 11.5 12.8 13.4 14.9
SYIL 17.2 20.6 15.7 16.3 20.2 19.5 19.1
GREENP 15.7 19.9 26.5 23.4 15.7 17.7 19.5
Tiles/Ceramics
KJC 14.8 18.3 16.5 13.5 15.3 15.6 15.9
CRS 13.5 12.9 15.8 16.6 16.1 15.9 15.9
SOMC 8.2 11.5 9.9 7.6 9.8 10.3 10.8
CARYSIL 16.8 21.2 21.4 18.1 18.8 19.8 20.0
Net Working Capital Days
Pipes
ASTRA 41 27 21 30 27 30 30
SI 43 29 44 39 31 35 35
FXNP 86 67 70 57 76 76 76
PRINCPIP 77 43 90 70 110 105 100
APOLP 66 65 68 50 41 53 53
Wood Panel
CPBI 79 79 75 65 73 63 63
MTLM 78 53 46 58 44 40 36
GRLM 94 89 81 69 65 60 55
SYIL 94 91 107 94 107 95 95
GREENP 43 35 16 18 28 19 19
Tiles/Ceramics
KJC 87 78 67 71 68 67 67
CRS 111 76 68 74 75 75 75
SOMC 99 63 44 42 18 23 28
CARYSIL 123 113 94 95 120 100 100
FY20 FY21 FY22 FY23 FY24 FY25E FY26E

RoE (%)
Pipes
ASTRA 16 21 21 17 17 19 20
SI 21 31 25 20 21 22 22
FXNP 17 24 27 5 8 10 11
PRINCPIP 13 21 20 9 12 13 15
APOLP 9 13 12 5 7 8 8
Wood Panel
CPBI 14 15 20 20 15 15 17
MTLM 12 14 18 14 10 18 19
GRLM 17 13 14 13 13 16 20
SYIL 9 21 19 23 24 22 22
GREENP 2 9 25 21 11 12 14
Tiles/Ceramics
KJC 15 16 18 15 16 17 18
CRS 15 12 15 18 18 17 17
SOMC 2 9 12 9 13 17 18
CARYSIL 14 20 26 17 17 21 22
RoIC (%)
ASTRA
SI 23 35 39 31 29 32 39
FXNP 25 43 35 27 34 35 37
PRINCPIP 17 39 37 9 15 16 19
APOLP 24 35 30 13 16 18 22
Wood Panel 15 20 18 9 13 13 14
CPBI
MTLM 11 15 23 21 13 17 21
GRLM 23 18 21 14 12 17 22
SYIL 18 17 17 17 13 15 19
GREENP 17 25 24 33 36 37 39
Tiles/Ceramics 6 12 32 31 14 14 18
KJC
CRS 19 24 27 22 24 25 28
SOMC 20 21 37 48 50 50 51
CARYSIL 6 12 14 10 15 19 23
ASTRA 18 23 29 18 17 21 23
COMPANY SECTION
PLASTIC PIPES
11 June 2024
Systematix
Building Materials
Apollo Pipes (HOLD, TP: Rs 691)

Weak project sales impacted 4Q volume; 30% volume CAGR
guidance intact
COMPANY UPDATE Apollo Pipes (APOLP) soft 4Q (revenue up 1%, EBITDA/PAT down 14%/55% YoY) was
Sector: Plastic Pipes Rating: HOLD driven by weak performance in pipes (volume up 10% YoY; EBITDA margin 9.9% and
Rs 12.4/kg). A 15% YoY decline in project sales (heavy 4Q) due to channel destocking
CMP: Rs 660 Target Price: Rs 691
ahead of election impacted 4Q volume. Despite soft 4Q, APOLP maintains its 3-year
Stock Info guidance of a robust 30% volume CAGR (incl. Kisan), ~11% EBITDA margin, <60 days
Sensex/Nifty 76,490/23,259 of WC cycle leading to 25-30% RoCE. Focus will be to gain market share over
Bloomberg APOLP IN margins in the next few years. To achieve this, the company aims ~2x capacity of
Equity shares (mn) 39 286kt in 3 years. A 30kt facility in Mirzapur (UP) at Rs 1.2bn capex is likely to start
52-wk High/Low 783/599 production in a year. It further aims to acquire lands worth Rs 1bn in FY25 in
Face value Rs 10 Maharashtra and South India for future expansion. Foray into UPVC doors and
M-Cap Rs 26bn/ USD 312mn
windows segment with an initial investment of Rs 450mn is also announced.
3-m avg turnover USD 0.3mn
Expansion in dealer network and A&P spend (to 1.5-2.5% of revenue) will drive
Financial Snapshot (Rs mn) sales. Reduction in agricultural mix (45% currently) and new product launches (O-
Y/E Mar FY24 FY25E FY26E PVC pipes, UPVC doors etc.) augur well for margin. Kisan’s issue of working capital
Net sales 9,869 13,087 17,353 availability is sorted after the acquisition; APOLP aims to achieve peak utilisation
EBITDA 958 1,310 1,824 by FY26 end (from 30-40% currently) and a Rs 8bn+ revenues from Kisan with ~11%
OPM (%) 9.7 10.0 10.5
EBITDA margin in FY27. After a soft 4Q, we maintained earnings estimates owing to
PAT (adj.) 426 692 1,045
healthy 30% volume CAGR guidance. We expect 33%/38%/57% CAGR in
EPS (adj.) (Rs) 10.8 17.6 26.6
PE (x) 60.0 37.0 24.5 revenue/EBITDA/PAT over FY24-26E. At ~25x FY26E P/E, we maintain HOLD rating
P/B (x) 4.5 2.9 2.1 with an unchanged target price of Rs 691, based on 26x FY26E P/E. Volume growth
EV/EBITDA (x) 26.2 18.5 12.6 and margin trajectory are the key monitorable in coming quarters. (concall KTAs)
RoE (%) 7.4 7.8 8.5
4Q – soft quarter: APOLP’s soft 4Q (revenue up 1%, EBITDA/PAT down 14%/55% YoY)
RoCE (%) 12.1 12.3 12.9
was driven by weak performance in pipes (volume up 10% YoY; EBITDA margin 9.9%
Net-D/E (x) (0.1) (0.1) (0.2)
and Rs 12.4/kg). A 15% YoY decline in project sales (heavy 4Q) due to channel
Shareholding Pattern (%) destocking ahead of election impacted 4Q volume. Kisan’s result was consolidated for
Apr’24 Mar’24 Dec’23 6 days in 4Q and thus distorted YoY comparison.
Promoter 48.3 50.8 50.8
- Pledged A Rs 5bn capex plan over FY24-26 to drive 30% volume CAGR: Despite soft 4Q,
FII 4.0 4.2 3.2 APOLP maintains its 3-year guidance of a robust 30% volume CAGR (incl. Kisan),
DII 14.4 15.1 15.2 ~11% EBITDA margin, <60 days of WC cycle leading to 25-30% RoCE. Focus will be to
Others 33.3 29.9 30.7 gain market share over margins in the next few years. To achieve this, the company
Stock Performance (1-year) aims ~2x capacity of 286kt in 3 years. A 30kt facility in Mirzapur (UP) at Rs 1.2bn
860
capex is likely start production in a year. It further aims to acquire lands worth Rs 1bn
in FY25 in Maharashtra and South India for future expansion. Foray into UPVC doors
783
and windows segment with an initial investment of Rs 450mn is also announced. It
705 expects Apollo’s dealer count to reach over 900 in a year from 700 currently. Kisan’s
628
dealer network will expand to 300 from 200 currently. It will also boost A&P spend to
1.5-2.5% of revenue to increase visibility. Reduction in agri mix (45% currently) and
550
new product launches (O-PVC pipes, UPVC doors etc.) augurs well for margin.
Dec-23
Oct-23
Jan-24
Apr-24
Jun-23
Jul-23
Mar-24
Jun-24
Nov-23
Aug-23
May-24
Sep-23
Feb-24
Kisan Moulding to add Rs 8bn+ to revenue by FY27: APOLP acquired Kisan Moulding
APOLP Sensex in Mar’24, having 60kt pipes & fittings capacity. Issue of working capital availability is
sorted after the acquisition. APOLP aims to achieve peak utilisation by FY26 end
(from 30-40% currently) and a Rs 8bn+ revenues with ~11% EBITDA margin in FY27. It
further plans to expand capacity to 80kt, using internal cash flow. Kisan clocked Rs
5bn+ revenue at its peak 3-4 years ago. Focus will also be to rise non-agri mix (~30%).
Concall key takeaways (4QFY24)

Business development & Outlook
• 4Q - soft quarter; pipes volume up 10% YoY, EBITDA (9.9% margin, Rs 12.4/kg)
• A 15% YoY decline in project sales (heavy 4Q) impacted 4Q volume
• 3-year guidance: Volume (30% CAGR incl Kisan); EBITDA (~Rs 3.5bn in FY27E,
~11% margin); WC cycle <60 days; RoCE 25-30%
• Focus will be to gain market share over margins in the next few years
• Improving WC efficiency will drive RoCE despite low margin
• Capex: Rs 5bn over FY23-27 to reach 286kt capacity
• A&P spend: 1.5-2.5% of revenue to maintain
• Agricultural mix (45%) to decline further as plumbing
• O-PVC pipe: replacement of DI pipes; Rs 1.25bn revenue potential in FY26
• Capacity: Total 216kt, Kisan 60kt, North 110kt, South 40kt
• B2B sales mix ~10-15%
• Dealers: Apollo (700, to reach 900+ in a year), Kisan (200, to reach 300+ in a year)
Kisan Moulding acquisition

• 60kt capacity, Rs 8bn+ revenue potential with ~11% EBITDA margin in 3 years
• Aims peak utilization in FY26 (from 30-40% currently)
• Issue of WC availability sorted after the acquisition
• To expand capacity to 80kt, using internal cash flow
• Kisan generated Rs 5bn+ revenue at its peak 3-4 years ago
• Agricultural mix: 70%
Exhibit 1: Apollo Pipes – Quarterly performance
(Rs mn) 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 YoY (%) QoQ (%) FY24 FY23 YoY (%)
Operating matrices
Volume (tons) 18,685 21,219 19,803 18,868 20,550 10 9 80,440 66,567 21
Realisation (Rs /kg) 135 123 126 117 124 (8) 6 123 137 (11)
EBITDA (Rs /kg) 15.7 12.3 12.2 10.7 12.4 (21) 16 12 10 17
P&L
Revenue 2,519 2,603 2,495 2,216 2,556 1 15 9,869 9,145 8
Raw material costs 1,810 1,904 1,782 1,569 1,881 4 20 7,136 6,928 3
Employee costs 124 152 164 154 143 15 (7) 614 517 19
Other expenses 292 285 306 291 278 (5) (5) 1,161 1,020 14
EBITDA 294 262 241 201 254 (14) 26 958 680 41
Depreciation 76 67 72 75 85 12 13 299 284 5
Finance costs 24 15 7 14 15 (40) 6 51 89 (43)
PBT 201 192 175 123 158 (22) 28 648 327 98
Tax 51 52 46 33 89 74 174 220 88 149
PAT 150 139 129 91 67 (55) (26) 426 239 78
EPS (Rs) 3.8 3.5 3.3 2.3 1.7 (55) (26) 10.8 6.1 78
As % Revenue YoY (bps) QoQ (bps) YoY (bps)
Gross margin 28.2 26.9 28.5 29.2 26.4 (176) (279) 27.7 24.2 345
Employee costs 4.9 5.8 6.6 7.0 5.6 68 (137) 6.2 5.7 56
Other expenses 11.6 11.0 12.3 13.1 10.9 (70) (228) 11.8 11.2 61
EBITDA margin 11.7 10.1 9.7 9.1 9.9 (174) 86 9.7 7.4 227
Depreciation 3.0 2.6 2.9 3.4 3.3 31 (8) 3.0 3.1 (8)
Finance costs 1.0 0.6 0.3 0.6 0.6 (39) (5) 0.5 1.0 (46)
Other income 0.3 0.5 0.5 0.5 0.1 (16) (36) 0.4 0.2 18
PBT 8.0 7.4 7.0 5.6 6.2 (181) 62 6.6 3.6 299
Effective tax rate 25.4 27.4 26.2 26.4 56.3 3,091 2,996 33.9 26.9 699
PAT 6.0 5.3 5.2 4.1 2.7 (326) (140) 4.3 2.6 172
Valuation and View

India’s fastest-growing plastic pipes company, APOLP, benefits from its association
with APL Apollo Tubes, which enjoys strong brand recall and a vast distribution
network. Regular capacity additions have enabled APOLP to add SKUs to its existing
product lines, as also expand into newer categories. We laud the company’s
aspiration to emerge as a leading pan-India player in the pipes and fittings industry.
After a soft 4Q, we maintained earnings estimates owing to healthy 30% volume
CAGR guidance. We expect 33%/38%/57% CAGR in revenue/EBITDA/PAT over FY24-
26E. At ~25x FY26E P/E, we maintain HOLD rating with an unchanged target price of
Rs 691, based on 26x FY26E P/E. Volume growth and margin trajectory are the key
monitorable in coming quarters.
Exhibit 2: Change in estimates
Revenue 13,247 17,566 13,087 17,353 (1) (1) 13,087 17,353 - - 13,597 17,361 4 0
EBITDA 1,310 1,825 1,310 1,824 0 (0) 1,310 1,824 - - 1,342 1,832 2 0
EBITDA margin (%) 9.9 10.4 10.0 10.5 10.0 10.5 9.9 10.6
PAT 701 1,045 692 1,045 (1) 0 692 1,045 - - 698 984 1 (6)
EPS 18 27 18 27 18 27 16 23
Source: Systematix Institutional Research
Exhibit 3: P/E band – 1-year-forward and standard deviation

120
90
60 +1 SD 62
Mean 39
30
-1 SD 16
0
Jul-20
Dec-19
Jun-24
Jun-19
Nov-23
Mar-22
Oct-22
Feb-21
Aug-21
May-23
Source: BSE, Systematix Institutional Research
Risks
• Slowdown in real-estate activities and the economy
• An unfavourable monsoon and high product prices
• Intensifying competition from large, organised and small regional players
• Price volatility in PVC
FINANCIALS
Profit & Loss Statement Balance Sheet
YE: Mar (Rs mn) FY22 FY23 FY24 FY25E FY26E YE: Mar (Rs mn) FY22 FY23 FY24 FY25E FY26E
Net revenues (Rs mn) 7,841 9,145 9,869 13,087 17,353 Share capital 393 393 394 394 394
Growth (%) 51 17 8 33 33 Net worth 4,053 4,572 5,740 8,874 12,301
Direct costs 5,732 6,928 7,136 9,463 12,513 Total debt 387 437 632 652 672
Gross Margin (%) 26.9 24.2 27.7 27.7 27.9 Minority interest - - - - -
SG&A 1,175 1,537 1,775 2,314 3,016 DT Liability/(Asset) 14 44 103 102 101
EBITDA 934 680 958 1,310 1,824 Capital Employed 4,454 5,053 6,476 9,628 13,074
EBITDA margins (%) 11.9 7.4 9.7 10.0 10.5 Net tangible assets 2,153 2,597 4,656 6,233 7,698
- Depreciation 257 284 299 423 535 Net Intangible assets 211 210 312 312 312
Other income 38 20 39 105 179 Goodwill - - - - -
Interest Exp 43 89 51 56 56 CWIP 71 56 84 84 84
PBT 672 327 648 935 1,412 Investments (Strategic) - - - - -
Effective tax rate (%) 25.9 26.9 33.9 26.0 26.0 Investments (Financial) 43 401 516 516 516
+ Associates/(Minorities) - - (2) - - Current Assets 2,543 3,008 3,978 4,893 6,104
Net Income 498 239 426 692 1,045 Cash 418 348 560 1,424 2,842
Adjusted income 498 239 426 692 1,045 Current Liabilities 985 1,567 3,630 3,833 4,481
WANS 39 39 39 39 39 Working capital 1,558 1,442 348 1,060 1,623
FDEPS (Rs/share) 12.6 6.1 10.8 17.6 26.6 Capital Deployed 4,454 5,053 6,476 9,628 13,074
FDEPS growth (%) 12 (52) 78 62 51 Contingent Liabilities 392 307 - - -
Cash Flow Ratios @ Rs 660

YE: Mar (Rs mn) FY22 FY23 FY24 FY25E FY26E YE: Mar FY22 FY23 FY24 FY25E FY26E
EBIT (before other income) 681 401 683 935 1,412 P/E (x) 52.2 108.6 60.9 37.5 24.9
+ Non-cash items 257 284 299 423 535 EV/EBITDA (x) 27.7 37.7 26.6 18.8 12.8
OCF before WC 938 685 982 1,359 1,948 EV/sales (x) 3.3 2.8 2.6 1.9 1.3
- Incr./(decr.) in WC 417 (146) (444) 712 563 P/B (x) 6.4 5.7 4.5 2.9 2.1
Others including taxes 158 144 180 191 315 RoE (%) 12.3 5.2 7.4 7.8 8.5
Operating cash-flow 363 687 1,247 457 1,070 RoCE (%) 16.6 8.8 12.1 12.3 12.9
- Capex 405 712 968 2,000 2,000 ROIC 18.5 9.2 12.6 12.8 14.2
Free cash-flow (41) (25) 279 (1,543) (930) DPS (Rs per share) 1.0 0.6 1.0 1.5 3.0
Acquisitions Dividend yield (%) 0.2 0.1 0.2 0.2 0.5
- Dividend - 39 24 59 118 Dividend payout (%) 7.9 9.9 9.2 8.5 11.3
+ Equity raised - - 659 2,500 2,500 Net debt/equity (x) (0.0) (0.1) (0.1) (0.1) (0.2)
+ Debt raised (256) 51 (1,222) 20 20 Receivables (days) 33 26 29 29 29
- Fin Investments 14 (3) 1,184 - - Inventory (days) 61 68 73 73 73
- Misc. Items (CFI + CFF) (7) 60 25 - - Payables (days) 26 45 62 50 50
Net cash-flow (304) (70) (1,516) 917 1,472 CFO:PAT (%) 73 287 292 66 102
11 June 2024
Systematix
Building Materials
Astral (HOLD, TP: Rs 2,017)

4Q, a mix bag quarter; robust outlook across segments intact
COMPANY UPDATE Astral’s (ASTRA) 4Q came broadly inline as weak result in adhesives & paints
Sector: Plastic Pipes Rating: HOLD (revenue up 4% YoY, EBITDA margin 12.9%) was offset by strong pipes EBITDA (20.4%
CMP: Rs 2,161 Target Price: Rs 2,017 margin, Rs 38/kg). Pipes volume/revenue grew 23%/9% YoY. It generated a strong Rs
8.2bn CFO in FY24 (utilized for Rs 5.5bn capex). Cash surplus of ~Rs 6bn will be used
Stock Info for growth capex. After 24% pipes volume growth in FY24, ASTRA has maintained its
Sensex/Nifty 76,490/23,259 15-20% CAGR guidance (vs. 10-12% for industry) for next few years. EBITDA margin
Bloomberg ASTRA IN (18%+) will be aided by savings from logistics costs (plants across regions), lower A&P
Equity shares (mn) 269
spend (FY24: Rs 1.75bn incl. Rs 350mn one-time spend on 25th anniversary
52-wk High/Low 2,304/1,774
celebration; to discontinue big celebrity endorsement) and operating leverage
Face value Rs 1
benefits. Hyderabad (Jun’24) and Kanpur (4Q) plants are scheduled to start
M-Cap Rs 581bn/USD 6.9bn
3-m Avg volume USD 17.7mn production in FY25. Starting from Ahmedabad, O-PVC pipes will be manufactured at
all plants. Water tanks (FY24 revenue: Rs 1.15bn; 20% CAGR) and Bathware
Financial Snapshot (Rs mn) (FY24/25E revenue: Rs 620mn/1.25bn, EBITDA breakeven in FY25 from Rs 180mn loss
Y/E Mar FY24 FY25E FY26E in FY24) are high growth areas. Adhesives India business continue to grow healthy;
Net sales 56,414 65,904 77,884
UK business grew 10% with 7-8% margin after impacted by huge price correction in
EBITDA 9,183 11,173 13,749
earlier period. Paints business (FY24/25E revenue: Rs 1.85bn/3bn, ~14.5% EBITDA
OPM (%) 16.3 17.0 17.7
PAT (adj.) 5,461 7,074 9,042 margin) is also expected to rebound after course correction measures taken. After 4Q
EPS (adj.) (Rs) 20.3 26.3 33.6 result, we cut our earnings estimates by 4-7%. We now expect 17%/29% CAGR in
PE (x) 103.4 79.9 62.5 revenue/PAT over FY24-26E. While we remain upbeat on ASTRA’s long-term
P/B (x) 17.7 15.0 12.6 prospects, we maintain HOLD on rich valuation, with a revised Rs 2,017 TP (60x FY26E
EV/EBITDA (x) 61.0 49.7 40.0 P/E, earlier Rs 1,949). Robust growth and RoCE are keys to sustain high valuation.
RoE (%) 17.1 18.8 20.1 4Q - broadly inline results; weak adhesives & paints result offset by strong pipes
RoCE (%) 23.6 26.1 28.3 EBITDA: ASTRA’s consolidated revenue grew 8% YoY (inline), EBITDA/PAT declined
Net-D/E (x) (0.2) (0.2) (0.3)
6%/1% YoY. EBITDA margin stood at 17.9% (down 257bps YoY). Weak adhesives &
Shareholding Pattern (%) paints result (revenue up 4% YoY, EBITDA down 11% YoY with 12.9% margin) was
Mar’24 Dec’23 Sep’23 offset by strong pipes EBITDA (20.4% margin, Rs 38/kg). Pipes volume/revenue up
Promoter 54.1 54.1 55.9 23%/9% YoY (inline). It generated a strong Rs 8.2bn CFO in FY24 (FY23 at 5.6bn) which
- Pledged was utilized for capex (Rs 5.5bn). Cash surplus stood high at ~Rs 6bn.
FII 21.2 19.8 18.5
Pipes – 4Q volume/revenue up 23%/9% YoY, EBITDA (20.4% margin, Rs 38/kg); 15-
DII 12.9 13.7 13.2
Others 11.8 12.4 12.4
20% volume CAGR guidance intact: After clocking 24% YoY volume growth in FY24,
ASTRA has maintained its 15-20% CAGR guidance (vs. 10-12% for industry) for the
Stock Performance (1-year) next few years. EBITDA margin is also likely sustainable at 18%+ due to savings from
2,500 lower logistics costs (plants across regions), lower A&P spend (Rs 1.75bn in FY24
2,275 includes Rs 350mn of one-time spend on 25th anniversary celebration; to discontinue
2,050
big celebrity endorsement) and operating leverage benefits. Plants at Guwahati and
Cuttack are fully operational; Hyderabad (Jun’24) and Kanpur (4QFY25) plants is
1,825
expected in FY25. ASTRA plans big entry into the O-PVC pipes. Starting from
1,600 Ahmedabad, O-PVC pipes will be manufactured at all plants. Water tanks (FY24
Oct-23
Jan-24
Jul-23
Apr-24
Dec-23
Mar-24
Nov-23
Jun-23
Aug-23
Sep-23
Feb-24
May-24
Jun-24
revenue: Rs 1.15bn) is expected to grow at 20% CAGR. Bathware (4Q/FY24 revenue: Rs

242/620mn, Rs 180mn EBITDA loss) crossed 1,000 dealers; Rs 1.25bn revenue, EBITDA
ASTRA Sensex
breakeven is aimed for FY25E.
Adhesives & paints – 4Q revenue up 4% YoY, EBITDA margin 12.9%; aims 15-20%
revenue CAGR, 14-15% margin over next few years: While India business continue
to grow healthy, UK business grew 10% with 7-8% margin (after huge price
correction seen in earlier period). Paints business (FY24 revenue declined to Rs
1.85bn with ~14.5% EBITDA margin) also went through phase of course correction
measures. ASTRA expects strong rebound in both segments in coming years. Dahej
greenfield plant is expected to produce adhesives products from 2QFY25.
Exhibit 1: ASTRAL (Consolidated) – Quarterly results
Revenue 15,062 12,831 13,630 13,702 16,251 8 19 56,414 51,585 9
Employee costs 862 996 1,053 1,141 1,194 39 5 4,384 3,193 37
Other expenses 1,830 1,769 2,048 2,085 2,355 29 13 8,257 5,946 39
EBITDA 3,089 2,016 2,201 2,051 2,915 (6) 42 9,183 8,099 13
Depreciation 445 463 487 501 525 18 5 1,976 1,781 11
Finance costs 33 58 80 75 78 136 4 291 400 (27)
Other income 66 121 134 64 102 55 59 421 269 57
Exceptional items (18) - - - - - - (18) (100)
PBT 2,659 1,616 1,768 1,539 2,414 (9) 57 7,337 6,169 19
Tax 654 423 451 406 600 (8) 48 1,880 1,557 21
PAT pre minority, share of JVs 2,005 1,193 1,317 1,133 1,814 (10) 60 5,457 4,612 18
Minority, share of JVs etc (10) (5) 5 (2) (4) (6) 143 (104)
Consol. PAT (after JV/assoc.) 2,057 1,198 1,312 1,135 1,816 (12) 60 5,461 4,567 20
EPS (Rs) 7.6 4.5 4.9 4.2 6.8 (12) 60 20.3 17.0 20
Gross margin 38.4 37.3 38.9 38.5 39.8 139 126 38.7 33.4 527
Employee costs 5.7 7.8 7.7 8.3 7.3 162 (98) 7.8 6.2 158
Other expenses 12.1 13.8 15.0 15.2 14.5 234 (73) 14.6 11.5 311
EBITDA margin 20.5 15.7 16.1 15.0 17.9 (257) 297 16.3 15.7 58
Depreciation 3.0 3.6 3.6 3.7 3.2 28 (43) 3.5 3.5 5
Finance costs 0.2 0.5 0.6 0.5 0.5 26 (7) 0.5 0.8 (26)
Other income 0.4 0.9 1.0 0.5 0.6 19 16 0.7 0.5 22
PBT 17.8 12.6 13.0 11.2 14.9 (292) 362 25.6 25.2 38
Effective tax rate 24.6 26.2 25.5 26.4 24.9 26 (153) 25.6 25.2 38
Consol PAT 13.7 9.3 9.6 8.3 11.2 (248) 289 9.7 8.9 83
Pipes & Bathware YoY (%) QoQ (%) YoY (%)
Revenue (Rs mn) 11,235 9,383 9,804 9,981 12,252 9 23 41,420 37,675 10
EBITDA (Rs mn) 2,561 1,653 1,768 1,649 2,502 (2) 52 7,572 6,419 18
EBITDA margin (%) 22.8 17.6 18.0 16.5 20.4 18.3 17.0
Pipes capacity (t) 2,90,176 2,90,176 2,90,176 2,90,176 3,20,176 10 10 2,90,176 2,82,338 3
CU (%) 75 66 72 73 83 76 63
Pipes volume (t) 54,438 47,950 52,079 52,734 66,827 23 27 2,19,590 1,77,628 24
Realisation (Rs /kg) 204 193 185 185 180 (12) (3) 189 212 (11)
Pipes EBITDA (Rs /Kg) 47.7 35.2 34.7 32.0 40.1 (16) 25 35.8 37.1 (3)
Adhesives & Paints YoY (%) QoQ (%) YoY (%)
Revenue (Rs mn) 3,827 3,448 3,826 3,721 3,999 4 7 14,994 13,910 8
EBITDA (Rs mn) 579 484 567 466 514 (11) 10 2,031 1,932 5
EBITDA margin (%) 15.1 14.0 14.8 12.5 12.9 13.5 13.9
Outlook and Valuation

We find ASTRA appealing for its consistent focus on growth and profitability,
supported by innovative product launches, vigorous brand building and successful
product diversification. After establishing a leading position in plumbing pipes, it has
now expanded into Adhesives, Paints and the Bathware segments. Its foray into
adjacent segments (organically or inorganically) to lever its brand and distribution
network, has enabled it to effectively capture growth opportunities.
The company’s consistent focus on properly allocating capital has been its strength,
with its key strategy to add capacity ahead of demand. It now has plants and depots
across regions, which should help it in faster turnaround and save on logistic costs.
Robust revenue/PAT CAGR of 18%/23% over FY19-24 and RoE expansion have
supported ASTRA’s high and premium valuations over peers. After 4Q result, we cut
our earnings estimates by 4-7%. We now expect 17%/29% CAGR in revenue/PAT over
FY24-26E. While we remain upbeat on ASTRA’s long-term prospects, we maintain
HOLD on rich valuation, with a revised Rs 2,017 TP (60x FY26E P/E, earlier Rs 1,949).
Robust growth and RoCE are keys to sustain high valuation.
Revenue 67,466 78,952 66,228 77,637 (2) (2) 65,904 77,884 (0) 0 68,223 81,218 4 4
EBITDA 12,090 14,543 11,310 13,802 (6) (5) 11,173 13,749 (1) (0) 11,978 14,566 7 6
EBITDA margin (%) 17.9 18.4 17.1 17.8 17.0 17.7 17.6 17.9
PAT 7,739 9,533 7,178 9,105 (7) (4) 7,074 9,042 (1) (1) 7,453 9,319 5 3
EPS 29 35 27 34 26 34 27 35
Exhibit 3: P/E band – One-year-forward and standard deviation

140
105
+1 SD 89
70 Mean 69
-1 SD 49
35
0
Jun-19
Dec-19
Jul-20
Nov-23
Jun-24
Oct-22
Feb-21
Apr-23
Aug-21
Mar-22
Risks
• Lower-than-desired level of success in product launches
• Volatility in raw material prices
FINANCIALS (CONSOLIDATED)
Growth (%) 38.3 17.4 9.4 16.8 18.2 Net worth 23,366 27,112 31,881 37,610 44,903
Direct costs 29,280 34,347 34,590 40,271 47,436 Total debt (incl. Pref) 851 773 964 974 984
Gross Margin (%) 33.4 33.4 38.7 38.9 39.1 Minority interest 278 2,477 804 824 844
SG&A 7,107 9,139 12,641 14,460 16,699 DT Liability/(Assets) 398 299 439 429 419
EBITDA 7,553 8,099 9,183 11,173 13,749 Capital Employed 24,893 30,661 34,088 39,837 47,150
- Depreciation 1,269 1,781 1,976 2,111 2,274 Net Intangible assets 233 1,813 1,515 1,515 1,515
Other income 349 267 421 593 822 Goodwill 2,567 3,125 3,133 3,133 3,133
Interest Exp 129 400 291 158 159 CWIP 1,232 1,261 1,506 1,506 1,506
PBT 6,504 6,167 7,337 9,496 12,138 Investments (Strategic) - - - - -
Effective tax rate (%) 24.3 25.2 25.6 25.5 25.5 Investments (Financial) - - - 6,500 13,000
+ Associates/(Minorities) (85) (174) 4 (1) (1) Current Assets 11,259 14,651 14,362 17,930 21,094
Net Income 4,839 4,566 5,461 7,074 9,042 Cash 6,418 6,821 6,096 3,652 3,194
Adjusted income 4,839 4,566 5,461 7,074 9,042 Current Liabilities 8,976 11,577 10,870 13,134 15,254
WANS 201.0 269.0 269.0 269.0 269.0 Working capital 2,283 3,074 3,492 4,796 5,840
FDEPS growth (%) 19.7 (6.0) 20.1 29.5 27.8 Contingent Liabilities 2,134 1,832 - - -
Cash Flow Ratios @ Rs 2,161

EBIT (before other income) 6,545 6,468 7,530 8,981 11,395 P/E (x) 120.1 127.8 106.4 82.2 64.3
+ Non-cash items 1,269 1,781 1,976 2,111 2,274 EV/EBITDA (x) 76.2 71.0 62.7 51.2 41.2
OCF before WC 7,814 8,249 9,506 11,093 13,669 EV/sales (x) 13.1 11.2 10.2 8.7 7.3
- Incr./(decr.) in WC 705 1,026 (500) 1,204 945 P/B (x) 24.9 21.4 18.2 15.5 12.9
Others including taxes 1,678 1,654 1,772 2,523 3,197 RoE (%) 20.7 16.8 17.1 18.8 20.1
Operating cash-flow 5,431 5,569 8,234 7,365 9,527 RoCE (%) 29.4 23.7 23.6 26.1 28.3
- Capex 3,446 3,099 5,502 2,500 2,500 ROIC 38.8 30.9 28.6 32.1 38.5
Free cash-flow 1,985 2,470 2,732 4,865 7,027 DPS (Rs per share) 1.8 2.3 3.8 5.0 6.5
Acquisitions - 16 - - - Dividend yield (%) 0.1 0.1 0.2 0.2 0.3
- Dividend 451 603 (1,007) 1,345 1,749 Dividend payout (%) 7.3 13.3 18.5 19.0 19.3
+ Equity raised - - - - - Net debt/equity (x) (0.2) (0.2) (0.2) (0.2) (0.3)
+ Debt raised 134 (384) 191 10 10 Receivables (days) 22 25 24 30 30
- Fin Investments (4,126) 1,730 (26) 6,500 6,500 Inventory (days) 61 62 59 60 60
- Misc. Items (CFI + CFF) 88 887 3,157 (526) (754) Payables (days) 62 57 56 60 60
Net cash-flow 5,706 (1,118) 799 (2,444) (458) CFO:PAT (%) 112 122 151 104 105
11 June 2024
Systematix
Building Materials
Finolex Industries (HOLD, TP: Rs 305)

Likely rise in non-agri mix to boost pipes EBIT
COMPANY UPDATE Finolex Industries’s (FNXP) strong pipes EBIT (Rs 13.3/kg, 11.2% margin) led to 15-
Sector: Plastic Pipes Rating: HOLD 20% beat in 4Q EBITDA/PAT. Revenue (up 8% YoY) came inline driven mainly by
CMP: Rs 340 Target Price: Rs 305 23%/7% YoY rise in pipes volume/revenue. With addition of dealers in untapped
markets, FNXP aims to increase its non-agri mix (36% currently) to 50% in next few
Stock Info years. Project segment is also a focus area. Superior product mix and OpLev
Sensex/Nifty 76,490/23,259 benefits on healthy volumes (aided by low and stable PVC prices) will likely
Bloomberg FNXP IN improve pipes EBIT to Rs 14/kg. The company has enough land at existing locations
Equity shares (mn) 618.4
to expand current pipes capacity of 470kt (incl. 48kt of fittings at 65% utilisation).
52-wk High/Low 350/165
Capex for FY25 is envisaged at Rs 1.5bn; entry into HDPE and O-PVC pipe segments
Face value Rs 2
are currently not in plan. PVC-resin is a commodity business with no pricing power,
M-Cap Rs 210bn/ USD 2.5bn
3-m Avg turnover USD 3.8mn hence the volatility in margins. The current low spreads (PVC-EDC USD 480/t, PVC-
VCM 140/t) suggest low PVC resin margins (<15%; 4Q at 12.9%) in near future. Post
Financial Snapshot (Rs mn) a decent 4Q, we increased earnings estimates by ~4% on higher margins
Y/E Mar FY24 FY25E FY26E expectation. We now expect 16%/16%/25%/ 23% CAGR in pipes-volume/revenue
Net sales 43,174 48,941 57,731
/EBITDA/PAT over FY24-26E (FY19-24: 10%/7%/-1%/5%), as volume growth and
EBITDA 5,843 7,700 9,083
margins in pipes likely expand. Given its low RoCE (~14%) and RoIC (~19%) profiles
OPM (%) 13.5 15.7 15.7
PAT (adj.) 4,736 5,996 7,196
in FY26E, we maintain HOLD rating on the stock, with a revised target price of Rs
EPS (adj.) (Rs) 7.7 9.7 11.6 305 (30x Pipes FY26E P/E; earlier Rs 269 at 25x). (Concall KTAs)
PE (x) 43.7 34.5 28.8 4Q - strong pipes EBIT led to 15-20% beat in EBITDA/PAT: Revenue grew 8% YoY
P/B (x) 3.7 3.4 3.2
(inline) while EBITDA/PAT declined 4%/1% (15-20% beat) driven by strong pipes EBIT
EV/EBITDA (x) 32.8 24.6 20.6
(Rs 13.3/kg, 11.2% margin). Cash flow from operation stood at Rs 3.54bn during FY24
RoE (%) 8.4 9.9 11.0
RoCE(%) 11.0 12.3 13.8
which boosted net cash levels to Rs 18.2bn at FY24 end.
Net-D/E (x) (0.3) (0.3) (0.3) Pipes 4Q volume/revenue up 23%/7% YoY; EBIT (up 47% YoY, Rs 13.3/kg, 11.2%
Shareholding Pattern (%) margin): Strong volume was driven by agri as well as non-agri segments. With
Mar’24 Dec’23 Sep’23 addition of dealers in untapped markets, FNXP aims to increase its non-agri mix (36%
Promoter 52.5 52.5 52.5 currently) to 50% in next few years. Project segment is also a focus area. Superior
- Pledged product mix and OpLev benefits on healthy volumes (aided by low and stable PVC
FII 6.4 6.5 6.7 prices) will likely improve pipes EBIT to Rs 14/kg. The company has enough land at
DII 11.0 12.0 12.2 existing locations to expand current pipes capacity of 470kt (incl. 48kt of fittings).
Others 30.2 29.1 28.7 Capex for FY25 is envisaged at Rs 1.5bn; entry into HDPE and O-PVC pipe segments
Stock Performance (1-year) are not in plan. FNXP aims to grow faster than the 10%+ growth in the PVC pipes
industry.
380
321 PVC resin 4Q volume/revenue up 19%/1% YoY; EBIT (down 44% YoY, Rs 9.5/kg,
263
12.9% margin): At USD 427/t PVC-EDC and USD 135/t PVC-VCM spreads, the
segment EBIT margin stood low at 12.9%. At the current spreads of 480/t and 140/t
204
respectively, we expect the segment EBIT margin to remain <15%. Built up of PVC
145 resin inventory is expected to normalize in coming quarters. PVC-resin is a
Oct-23
Dec-23
Jan-24
Jul-23
Apr-24
Mar-24
Jun-23
Nov-23
Jun-24
Aug-23
Sep-23
Feb-24
May-24
commodity business with no pricing power.

FNXP Sensex
Concall key highlights (4QFY24)

Outlook
• Non-agri mix (36%) is aimed to increase to 50% in next few years, aided by dealer
network expansion
• Project segment is also a focus area
• Targets to reach Rs 14/kg EBIT in Pipes on superior product mix and Operating
Leverage
• Don’t intend to get into HDPE pipes segment
• Built up of PVC resin inventory expected to normalize in coming quarters
• Expects PVC pipes industry to grow at 10-15% CAGR over the next 5 years
Spreads (USD /t)

• PVC-EDC spread (USD /t): 427 in 4Q; 480 currently
• PVC-VCM spread (USD /t): 135 in 4Q; 140 currently
Capex
• FY25E: Rs 1.5bn on brownfield expansion
• Have enough land to expand capacity at existing locations
• Pipes capacity: 470kt (fittings - 48kt, 65% CU)
4QFY24 - strong Pipes EBIT (Rs 13.3/kg, 11.2% margin) led to 15-20% beat in
EBITDA/PAT
• Revenue up 8% YoY (inline)
• EBITDA/PAT down 4%/1% YoY (15-20% beat)
• Pipes: volume/revenue up 23%/7% YoY; EBIT (up 47% YoY, Rs 13.3/kg, 11.2%
margin)
• PVC resin: volume/revenue up 19%/1% YoY; EBIT (down 44% YoY, Rs 9.5/kg,
12.9% margin)
• FY24 CFO of Rs 3.54bn aided to Rs 18.2bn net cash levels
Exhibit 1: FNXP – quarterly performance (Consolidated)
Revenue 11,411 11,792 8,832 10,197 12,354 8 21 43,174 43,971 (2)
Raw material costs 6,592 7,802 5,306 6,522 7,739 17 19 27,369 30,725 (11)
Employee costs 480 519 503 526 567 18 8 2,114 1,897 11
Other expenses 2,165 1,946 1,993 1,950 1,959 (9) 0 7,849 8,421 (7)
EBITDA 2,174 1,525 1,030 1,199 2,089 (4) 74 5,843 2,928 100
Depreciation 238 344 274 276 267 12 (3) 1,160 892 30
Finance costs 65 90 125 77 73 13 (5) 365 272 34
Other income 292 403 614 351 438 50 25 1,805 1,209 49
PBT 2,164 1,493 1,245 1,198 2,187 1 83 6,123 2,973 106
Tax 633 416 354 361 639 1 77 1,770 714 148
PAT (after JV/ Assoc.) 1,665 1,153 980 954 1,649 (1) 73 4,736 2,502 89
EPS (Rs) 2.7 1.9 1.6 1.5 2.7 (1) 73 7.7 4.0 89
As % Total Income YoY (bps) QoQ (bps) YoY (bps)
Gross margin 42.2 33.8 39.9 36.0 37.4 (487) 132 36.6 30.1 648
Employee costs 4.2 4.4 5.7 5.2 4.6 38 (57) 4.9 4.3 58
Other expenses 19.0 16.5 22.6 19.1 15.9 (311) (326) 18.2 19.2 (97)
EBITDA margin 19.1 12.9 11.7 11.8 16.9 (214) 515 13.5 6.7 687
Depreciation 2.1 2.9 3.1 2.7 2.2 7 (54) 2.7 2.0 66
Finance costs 0.6 0.8 1.4 0.8 0.6 3 (16) 0.8 0.6 22
Other income 2.6 3.4 6.9 3.4 3.5 99 10 4.2 2.8 143
PBT margin 19.0 12.7 14.1 11.7 17.7 (126) 596 14.2 6.8 742
Effective tax rate 29.3 27.8 28.4 30.1 29.2 (5) (92) 28.9 24.0 488
PAT (after JV/ Assoc.) 14.6 9.8 11.1 9.4 13.3 (124) 399 11.0 5.7 528
Pipes & Fittings YoY (%) QoQ (%) YoY (%)
Volume (t) 81,452 92,181 62,914 81,312 1,00,171 23 23 3,36,578 3,03,027 11
Realisation (Rs/kg) 135 125 136 122 118 (13) (3) 124 136 (8)
Revenue (Rs mn) 11,021 11,542 8,572 9,916 11,822 7 19 41,852 41,130 2
EBIT (Rs mn) 903 1,264 676 742 1,328 47 79 4,011 1,542 160
EBIT margin % 8.2 11.0 7.9 7.5 11.2 9.6 3.7
EBIT/kg (Rs) 11.1 13.7 10.7 9.1 13.3 20 45 11.9 5.1 134
PVC Resin YoY (%) QoQ (%) YoY (%)
Volume (t) 58,132 46,074 37,516 43,738 69,215 19 58 1,96,543 2,39,639 (18)
Realisation (Rs/kg) 86 78 79 73 73 (15) (0) 76 95 (20)
Revenue (Rs mn) 5,013 3,594 2,979 3,211 5,075 1 58 14,858 22,710 (35)
EBIT (Rs mn) 1,173 31 204 309 656 (44) 113 1,200 919
EBIT margin % 23.4 0.9 6.8 9.6 12.9 8.1 4.0
EBIT/kg (Rs) 20.2 0.7 5.4 7.1 9.5 (53) 34 6.1 3.8 59
Un-allocated exp (as % rev) (1.3) (2.4) (5.5) (2.2) (2.2) (2.9) (1.8)
EBIT mix (%)
Pipes & Fittings 44 98 77 71 67 77 63
PVC Resin 56 2 23 29 33 23 37
Valuation and View

FNXP is the leader in agri pipes. Its healthy FCF, greater focus on portfolio
(CPVC/SWR pipes) and network (north, east) expansion are positives. Much of its
sales in the agri-pipes segment is based on cash and carry (unlike peers), which
reflects its strong market position and brand equity. However, we remain concerned
on volatility in PVC resin margins. Additionally, high cash investments (low yield)
have suppressed its return ratios.
PVC-resin is a commodity business with no pricing power, hence the volatility in
margins. The current low spreads (PVC-EDC USD 480/t, PVC-VCM 140/t) suggest low
PVC resin margins (< 15%) in near future.
Post a decent 4Q, we increased earnings estimates by ~4% on higher margins
expectation. We now expect 16%/16%/25%/ 23% CAGR in pipes-volume/revenue
/EBITDA/PAT over FY24-26E (FY19-24: 10%/7%/-1%/5%), as volume growth and
margins in pipes likely expand. Given its low RoCE (~14%) and RoIC (~19%) profiles in
FY26E, we maintain HOLD rating on the stock, with a revised target price of Rs 305
(30x Pipes FY26E P/E; earlier Rs 269 at 25x).
Revenue 51,320 61,415 48,941 57,731 (5) (6) 48,941 57,731 - - 48,547 54,420 (1) (6)
EBITDA 7,605 8,917 7,700 9,083 1 2 7,700 9,083 - - 7,455 8,565 (3) (6)
EBITDA margin (%) 14.8 14.5 15.7 15.7 15.7 15.7 15.4 15.7
PAT 5,825 6,950 5,996 7,196 3 4 5,996 7,196 - - 5,967 7,027 (0) (2)
EPS 9 11 10 12 10 12 10 11
45
34
+1 SD 27
23
Mean 18
11
-1 SD 9
0
Jun-19
Jun-24
Nov-23
Dec-19
Jul-20
Oct-22
Feb-21
Aug-21
May-23
Mar-22
Risks
• Volatile PVC prices and PVC-EDC spreads may impact demand and our earnings estimates
Net revenues (Rs mn) 46,473 43,971 43,174 48,941 57,731 Share capital 1,241 1,237 1,237 1,237 1,237
Growth (%) 34 (5) (2) 13 18 Net worth 39,278 49,031 56,343 60,484 65,516
RM costs 28,491 30,721 27,369 30,242 35,673 Total debt 2,780 5,264 3,820 3,330 2,840
SG&A 7,745 10,324 9,962 10,999 12,975 DT Liability/(Asset) 1,360 1,493 2,334 2,384 2,434
- Depreciation 834 892 1,160 1,239 1,346 Net Intangible assets 9 8 11 11 11
Other income 822 1,209 1,805 1,464 1,727 Goodwill - - - - -
Effective tax rate (%) 24.0 23.8 28.9 26.8 26.6 Investments (Financial) 27,177 39,523 45,859 46,859 48,859
+ Associates/(Minorities) - - - - - Current Assets 15,440 11,724 13,660 15,214 17,598
Net Income 10,513 2,507 4,736 5,996 7,196 Cash 810 613 317 769 591
WANS 621 618 618 618 618 Working capital 5,405 4,661 5,578 6,566 8,182
FDEPS (Rs /share) 23.1 4.1 7.7 9.7 11.6 Capital Deployed 43,419 55,787 62,496 66,198 70,790

+ Non-cash items 834 892 1,160 1,239 1,346 EV/EBITDA (x) 19.2 67.4 33.3 25.0 21.0
OCF before WC changes 10,332 2,892 5,857 8,051 9,475 EV/sales (x) 4.2 4.5 4.5 3.9 3.3
- Incr./(decr.) in WC 756 (864) 876 1,008 1,636 P/B (x) 5.4 4.3 3.7 3.5 3.2
Others including taxes 3,356 679 1,448 1,900 2,296 RoE (%) 26.8 5.1 8.4 9.9 11.0
- Capex (2,962) 1,677 860 2,500 2,500 ROIC 36.5 9.0 14.7 16.5 18.6
Free cash-flow 9,182 1,400 2,673 2,643 3,042 DPS (Rs per share) 4.0 1.5 2.5 3.0 3.5
Acquisitions - - - - - Dividend yield (%) 1.2 0.4 0.7 0.9 1.0
- Dividend 2,482 2,482 928 1,855 2,164 Dividend payout (%) 24 37 33 31 30
+ Debt raised 728 2,445 (1,495) (490) (490) Receivables (days) 26 25 39 39 39
- Fin Investments 7,910 1,680 451 1,000 2,000 Inventory (days) 80 56 62 62 62
- Misc. Items (CFI + CFF) (403) (167) (136) (1,155) (1,434) Payables (days) 36 24 24 24 24
Net cash-flow (78) (150) (64) 453 (178) CFO:PAT (%) 59 123 75 86 77
11 June 2024
Systematix
Building Materials
Prince Pipes & Fittings (BUY, TP: Rs 779)

Market share gain and healthy margins are keys to re-rating
COMPANY UPDATE Prince Pipes’ (PRINCPIP) 4Q (pipe volume up 16% YoY; EBITDA margin 12.5% and Rs
Sector: Plastic Pipes Rating: BUY 18.2 /kg) came broadly inline with our estimates. Volume growth was driven by all
CMP: Rs 648 Target Price: Rs 779 the three verticals and key polymers (PVC, CPVC). High receivables was due to
demand surge in Mar’24 (should normalize in 1-2 quarters). Pipe volume grew 10%
Stock Info YoY in FY24 (likely maintained market-share). PRINCPIP is now competitive across
Sensex/Nifty 76,490/23,259 segment and geography after price rationalization measures. Active efforts in
Bloomberg PRINCPIP IN solidifying channel network, strengthening brand equity, and new product
Equity shares (mn) 110.6 launches should drive market share gain FY25 onwards (by outgrowing 15%
industry growth). Focus remains on to reduce WC cycle. Pan India manufacturing
Face value Rs 10
presence, after Bihar plant is operational in 4QFY25, will also drive volume and
M-Cap Rs 72bn/ USD 861mn
3-m Avg turnover USD 1.2mn
margins. TAM for PRINCPIP has expanded to ~Rs. 600bn spread over pipes, water
tanks and bathware. Aquel acquisition will drive robust growth in the bathware
Financial Snapshot (Rs mn) segment. After 4Q, we increase FY26E earnings by 6% owing to higher volume
Y/E Mar FY24 FY25E FY26E growth and margin expectations. We now estimate 18%/29%/30% CAGR in
Net sales 25,687 29,688 35,517
revenue/EBITDA/PAT over FY24-26E, on healthy volume (16% CAGR) and margin
EBITDA 3,074 3,986 5,128
expansion, resulting in improving OCF and RoCE (~21%). Upgrade rating to BUY with
OPM (%) 12.0 13.4 14.4
PAT (adj.) 1,825 2,255 3,075
a revised target price of Rs 779 (28x FY26E P/E, earlier Rs 723 at 26x). Strong
EPS (adj.) (Rs) 17 20 28 volumes/margins are keys to support a re-rating. (concall KTAs)
PE (x) 37.7 30.5 22.4 4Q - broadly inline; pipe volume up 16% YoY, EBITDA (12.5% margin, Rs 18.2 /kg):
P/B (x) 4.5 3.9 3.4 Consol. revenue declined 3% YoY. A 16% YoY volume growth was driven by all the
EV/EBITDA (x) 22.4 17.2 13.0
three verticals and key polymers (PVC, CPVC). High receivables were due to demand
RoE (%) 11.8 12.9 15.2
surge in Mar’24 (should normalize in 1-2 quarters). Channel financing (all non-
RoCE (%) 14.9 17.4 20.7
Net-D/E (x) (0.0) (0.0) (0.1)
recourse) utilized Rs 1bn of Rs 1.5bn sanctioned limit. Focus on distribution
expansion and A&P (FY24 at Rs 540mn) continued.
Shareholding Pattern (%)
Mar’24 Dec’23 Sep’23 Aims to gain market share by growing at faster than 15% industry growth: Pipe
Promoter 60.9 60.9 60.9 volume grew 10% YoY in FY24 (likely maintained market-share). Active efforts in
- Pledged solidifying channel network, strengthening brand equity, and new product launches
FII 5.2 5.7 5.0 should drive market share gains FY25 onward. PRINCPIP is now competitive across
DII 18.5 18.4 18.6 segment and geography after price rationalization measures. Focus remains on
Others 15.4 14.9 15.5 reducing WC cycle. Pan India manufacturing presence, after Bihar plant is
Stock Performance (1-year) operational in 4QFY25, will also drive volume and margins. TAM for PRINCPIP has
850
expanded to ~Rs. 600bn spread over pipes, water tanks and bathware. CPVC raw
material prices expected to be subdued due to local capacity available.
763
675
Aquel acquisition to drive bathware results: Bathware revenue stood at ~Rs 40mn
(FY24 total operational cost ~Rs 100mn). After expansion in the key Tier-2 and 3
588
markets of West and Northern India; the company plans to launch in East and South
500 market in 1HFY25. To boost the segment faster, PRINCPIP agreed to acquire Aquel’s
Dec-23
Jan-24
Oct-23
Apr-24
Jul-23
Nov-23
Mar-24
Sep-23
Jun-23
Aug-23
May-24
Jun-24
plant located in Bhuj, Gujarat for Rs 550mn and aims Rs 1.2bn revenue in few years.
It showcased Aquel by Prince brand at Plumbex India 2024.
PRINCPIP Sensex
Bihar greenfield plant capex on track to start production in 4QFY25: FY24 capex
included land acquisition for the Bihar plant (Rs 280mn), corporate office (370mn),
Aquel acquisition (120mn) and ERP (80mn). FY25E capex is pegged at ~Rs 2bn
(~Rs 0.8-1bn regular capex + Bihar plant). Phase-1 of the Bihar plant (~Rs 800mn
already invested out of Rs 2bn total) is likely to be operational by 4QFY25 with 48kt
pipes & fittings capacity.

4Q & FY24 key highlights
• Broadly inline 4Q; pipe volume up 16% YoY, EBITDA (12.5% margin, Rs 18.2 /kg)
• 4Q volume driven by all three verticals and key polymers (PVC, CPVC)
• High receivables was due to demand surge in 4Q, should normalize in 1-2
quarters
• Channel financing: utilized Rs 1bn of Rs 1.5bn sanctioned limit; all non-recourse
• Bathware: 4Q revenue ~Rs 40mn (FY24 total operational cost ~100mn)
• FY24 A&P spend at Rs 540mn

• FY24 pipe volume up 10% (likely maintained market-share)
• Aims to catch up on volume and gain market share by growing at faster than 15%
industry growth
• Active efforts in solidifying channel network, strengthening brand equity, and new
product launches should help
• Price correction done in 4Q; now competitive across segment and geography
• Focus remains on reducing WC cycle (100% channel finance on non-recourse
basis)
• Pan India manufacturing presence once Bihar plant becomes operational
• Bihar plant will cater to demand in the fast-growing East India
• TAM expands to ~Rs. 600bn, spread over Pipes, Water Tanks and Bathware
• CPVC raw material prices to be subdued due to local capacity available
Aquel acquisition
• Acquired the bathware brand Aquel’s plant located in Bhuj, Gujarat for Rs 550mn
• Aquel by Prince brand was showcased at Plumbex India 2024
• Continue to penetrate key Tier-2 and 3 markets across West and Northern India
• Plans to launch in East and South market in 1HFY25
• Aims Rs 1.2bn revenue
Capex
• FY24 capex includes Bihar plant land acquisition (Rs 280mn), Corporate office
(370mn), Aquel (120mn), ERP (80mn)
• FY25E capex pegged at ~Rs 2bn (~Rs 0.8-1bn regular capex + Bihar greenfield
plant)
• Bihar Begusarai plant phase-1 to be operational by 4QFY25 with 48kt pipes &
fittings capacity
• ~Rs 800mn spent in FY24 on land and civil structure in Bihar
Exhibit 1: Prince Pipes & Fittings – quarterly performance
P&L
Revenue 7,644 5,536 6,565 6,186 7,401 (3) 20 25,687 27,109 (5)
Raw material costs 5,121 4,142 4,511 4,316 5,224 2 21 18,193 20,922 (13)
Employee costs 309 320 405 373 379 23 2 1,477 1,161 27
Other expenses 731 620 707 741 876 20 18 2,943 2,523 17
EBITDA 1,483 453 942 757 923 (38) 22 3,074 2,503 23
Depreciation 211 218 225 229 239 13 4 912 830 10
Finance costs 28 17 7 27 14 (52) (50) 65 110 (41)
Other income 34 38 40 30 53 56 77 161 86 88
Exceptional gain/ (loss) - - 179 - - 179 -
PBT 1,278 256 928 530 723 (43) 36 2,438 1,648 48
Tax 337 59 222 154 177 (48) 15 612 434 41
PAT 941 196 706 376 546 (42) 45 1,825 1,214 50
EPS (Rs) 8.5 1.8 6.4 3.4 4.9 (42) 45 16.5 11.0 50
Gross margin 33.0 25.2 31.3 30.2 29.4 (359) (81) 29.2 22.8 635
Employee costs 4.0 5.8 6.2 6.0 5.1 108 (90) 5.7 4.3 147
Other expenses 9.6 11.2 10.8 12.0 11.8 227 (15) 11.5 9.3 215
EBITDA margin 19.4 8.2 14.3 12.2 12.5 (694) 23 12.0 9.2 273
Depreciation 2.8 3.9 3.4 3.7 3.2 47 (47) 3.5 3.1 49
Finance costs 0.4 0.3 0.1 0.4 0.2 (19) (26) 0.3 0.4 (15)
Other income 0.4 0.7 0.6 0.5 0.7 27 23 0.6 0.3 31
PBT 16.7 4.6 11.4 8.6 9.8 (695) 120 8.8 6.1 271
Effective tax rate 26.4 23.2 23.9 29.1 24.4 (191) (462) 25.1 26.3 (122)
PAT 12.3 3.5 10.8 6.1 7.4 (493) 130 7.1 4.5 263
Pipes
Revenue 7,644 5,536 6,565 6,126 7,321 (4) 20 25,547 27,109 (6)
Volume (mn t) 44,317 37,155 41,529 42,665 51,444 16 21 1,72,793 1,57,718 10
Realisation/kg (Rs) 172 149 158 144 142 (17) (1) 148 172 (14)
EBITDA/kg (Rs) 33.5 12.2 22.7 18.0 18.2 (46) 1 18 16 12
Bathware Revenue 0 0 0 60 80 (33) 140
Outlook and valuation

PRINCPIP is one of India’s largest integrated piping solutions and multi polymer
(CPVC, UPVC, HDPE, PPR) manufacturer. In August 2020, the company tied up with
Lubrizol (inventors and largest manufacturers of CPVC compounds worldwide) and
launched Prince FlowGuard Plus CPVC plumbing systems. The company is expanding
its network of 1,500+ distributors. It has 7 state-of-the-art manufacturing units
located across India, these being in Haridwar (Uttarakhand), Athal (Dadra and Nagar
Haveli), Dadra (Dadra and Nagar Haveli), Kolhapur (Maharashtra), Chennai (Tamil
Nadu), Jobner (Rajasthan) and Sangareddy (Telangana). It will have plants across
regions after Bihar plant is operational in FY25.
After 4Q, we increase FY26E earnings by 6% owing to higher volume growth and
margin expectations. We now estimate 18%/29%/30% CAGR in revenue/EBITDA/PAT
over FY24-26E, on healthy volume (16% CAGR) and margin expansion, resulting in
improving OCF and RoCE (~21%). Upgrade rating to BUY with a revised target price of
Rs 779 (28x FY26E P/E, earlier Rs 723 at 26x). Strong volumes/margins are keys to
support a re-rating.
Revenue 29,012 34,421 29,682 35,503 2 3 29,688 35,517 0 0 28,966 33,722 (2) (5)
EBITDA 3,990 4,861 3,986 5,126 (0) 5 3,986 5,128 0 0 3,785 4,625 (5) (10)
EBITDA margin (%) 13.8 14.1 13.4 14.4 13 14 13.1 13.7
PAT 2,276 2,886 2,255 3,073 (1) 6 2,255 3,075 0 0 2,123 2,690 (6) (13)
EPS 21 26 20 28 20 28 19 24
Exhibit 3: P/E band – One-year-forward and standard deviation
68
51
+1 SD 48
34 Mean 34
-1 SD 20
17
0
Jun-22
Jun-20
Dec-20
Jun-21
Dec-21
Dec-22
Jun-23
Dec-23
Jun-24
Risks
• High and volatile raw material prices may impact demand and profitability
• Intensifying competition may suppress demand and margins
FINANCIALS
Net revenues (Rs mn) 26,568 27,109 25,687 29,688 35,517 Share capital 1,106 1,106 1,106 1,106 1,106
Growth (%) 28.3 2.0 (5.2) 15.6 19.6 Net worth 12,653 13,640 15,444 17,478 20,277
Direct costs 18,915 20,922 18,193 20,652 24,419 Total debt (incl. Pref) 1,500 581 1,144 1,184 1,224
- Depreciation 703 830 912 1,059 1,168 Net Intangible assets 29 56 88 88 88
Effective tax rate (%) 26.0 26.3 25.1 25.5 25.5 Investments (Financial) 117 920 382 382 382
Net Income 2,494 1,214 1,825 2,255 3,075 Cash 586 1,223 777 1,125 2,955
FDEPS growth (%) 12.4 (51.3) 50.3 23.5 36.3 Contingent Liabilities 45 121 - - -

EBIT (incl. other income) 3,591 1,698 2,301 2,928 3,960 P/E (x) 28.7 59.0 39.2 31.8 23.3
+ Non-cash items 703 830 912 1,059 1,168 EV/EBITDA (x) 17.4 28.0 23.3 17.9 13.6
- Incr./(decr.) in WC 4,288 (1,321) 2,599 705 1,096 P/B (x) 5.7 5.3 4.6 4.1 3.5
Others including taxes 201 248 284 812 1,093 RoE (%) 19.7 8.9 11.8 12.9 15.2
Operating cash-flow (195) 3,602 329 2,469 2,939 RoCE (%) 27.3 12.3 14.9 17.4 20.7
- Capex 1,687 938 1,908 2,000 1,000 ROIC (%) 30.5 13.3 15.8 17.9 22.3
Free cash-flow (1,882) 2,663 (1,579) 469 1,939 DPS (Rs per share) 3.5 - 1.0 2.0 2.5
Acquisitions Dividend yield (%) 0.5 - 0.2 0.3 0.4
- Dividend 385 221 - 221 276 Dividend payout (%) 15.5 - 6.1 9.8 9.0
+ Equity raised 107 - - - - Net debt/equity (x) 0.1 (0.1) (0.0) (0.0) (0.1)
+ Debt raised 648 (919) 560 40 40 Receivables (days) 60 56 83 78 73
- Fin Investments (1,846) 531 (586) - - Inventory (days) 85 57 62 62 62
- Misc. Items (CFI + CFF) 102 94 20 (60) (128) Payables (days) 55 43 35 35 35
Net cash-flow 232 899 (453) 348 1,830 CFO:PAT (%) (8) 297 18 109 96
11 June 2024
Systematix
Building Materials
Supreme Industries (HOLD, TP: Rs 5,215)

Strong pipes volume to maintain superlative performance
COMPANY UPDATE Supreme Industries’ (SI) 4Q revenue/EBITDA/PAT (up 16%/2%/-1% YoY) came ahead
Sector: Plastic Pipes Rating: HOLD of our estimates by ~10% owing to strong 32% YoY volume growth (led by 41% surge
CMP: Rs 5,999 Target Price: Rs 5,215 in pipes volume). Reduction in PVC resin prices restricted revenue growth to 16%
YoY. CPVC prices were under pressure too due to overcapacity. EBITDA margin
Stock Info expanded 84bps QoQ to 16.3%, led by sharp improvement in industrial and
Sensex/Nifty 76,490/23,259 packaging segments. Share of value-added products (VAP) also stood high at ~40%.
Bloomberg SI IN After 33% surge in pipes volume growth in FY24 (vs. 13.7% growth for industry),
Equity shares (mn) 127.1 management’s ambition to grow 25-30% in FY25 is quite encouraging. A Rs 15bn
52-wk High/Low 5,999/2,901
capex plan for FY25 (incl. Rs 5bn c/f capex) will enhance total capacity to over 1mn
Face value Rs 2
ton (led by pipes capacity of 835kt). On robust guidance, we increased our earnings
M-Cap Rs 762bn/ USD 9.1bn
3-m avg turnover USD 6.7mn
estimates by ~5% after 4Q. We now expect 19%/21%/20% CAGR in revenue/
EBITDA/PAT over FY24-26E, on strong 18% volume CAGR and normalised EBITDA
Financial Snapshot (Rs mn) margins (15.5%+). Despite high capex, SI’s strong FCFs and healthy RoE/RoCE
Y/E Mar FY24 FY25E FY26E (~22%/30% in FY26E) will sustain. On rich valuation, we maintain HOLD with a
Net sales 1,01,343 1,21,361 1,43,766 revised TP of Rs 5,215 (45x core FY26E P/E; earlier Rs 4,658 at 42x). (concall KTAs)
EBITDA 15,473 18,797 22,583
OPM (%) 15.3 15.5 15.7 4Q – strong pipes volume, healthy margins and JV profits led to PAT beat: Overall
PAT (adj.) 10,697 12,910 15,441 volumes rose 32% YoY led by pipes division (surged 41%). Other segments remain in
EPS (adj.) (Rs) 84.2 101.6 121.5 slow lane though. Reduction in PVC resin prices restricted revenue growth to 16%
PE (x) 65.3 54.1 45.3 YoY. CPVC prices were under pressure due to overcapacity. EBITDA margin expanded
P/B (x) 13.7 11.7 10.0 84bps QoQ to 16.3%, led by sharp improvement in industrial and packaging
EV/EBITDA (x) 44.4 36.6 30.1
segments. Share of VAP also stood high at ~40%. Consequently, EBITDA and PAT
RoE (%) 20.9 21.7 22.1
(after JV share) came flattish. High WC management boosted cash surplus at Rs
RoCE (%) 27.1 28.2 29.2
Net-D/E (x) (0.2) (0.2) (0.3)
11.8bn vs. Rs 7.4bn at end-FY23.
Shareholding Pattern (%) Robust growth outlook intact: In FY24, SI gained significant market share in its piping
Mar’24 Dec’23 Sep’23 segment, volumes of which surged 33% versus 13.7% for the industry. SI claims to have
Promoter 48.9 48.9 48.9 over 12% market share in the piping segment. New SKUs, multi-location plants,
- Pledged distribution expansion etc. were the key drivers for the company. In FY25, SI aims 20%
FII 24.7 24.7 23.9 volume growth led by piping system (25-30% growth). Industrial and Packaging
DII 11.4 12.2 12.5 segments are expected to grow at ~10% while Consumer products is likely to see no
Others 15.1 14.3 14.8 growth. Demand from Nal Se Jal program (5% revenue mix for Supreme, thin margin)
Stock Performance (1-year) is likely to be over in next 2 years. Demand from Gas pipe industry is emerging as the
7,000
next big opportunity. On robust guidance, we increase our earnings estimates by
~5%. We now expect 19%/21%/20% CAGR in revenue/EBITDA/PAT over FY24-26E, on
5,875
healthy 18% volume CAGR and normalised EBITDA margins (15.5%+). Despite high
4,750 capex, SI should sustain strong FCFs and healthy RoE/RoCE (~22%/30% in FY26E).
3,625
Continued capex to support growth: After having invested ~Rs 7bn in FY24, SI
2,500 remains optimistic and commits Rs 15bn capex incl. carry forward capex of ~Rs 5bn.
Aug-23
Oct-23
Feb-24
Sep-23
Jan-24
Apr-24
Dec-23
Jul-23
Mar-24
Jun-23
Nov-23
Jun-24
May-24
Alongwith expanding capacities across product segments at existing locations, it

plans to put up new plants near Patna (Bihar), Vijayawada (AP), Kanpur (UP) and
SI Sensex
JNPT port (MH). Current total capacity of 950kt (730kt pipes, 90kt industrial, 90kt
packaging, 23kt consumer) is planned to to cross 1,050kt in FY25 mainly led by pipes
(835kt). To meet the growth in demand, SI has initiated steps to put up new plant
near JNPT Port. The site near JNPT port will facilitate easy transportation of
Protective and Performance Packaging products at economical cost in export and
domestic markets.
4QFY24 result highlights and concall KTAs

4QFY24 result highlights
• Strong quarter led by 32% YoY volume growth led by a 41% growth in the pipe
segment
• Revenue could grow by a lower 16% YoY due to reduction in PVC prices
• EBITDA margin expanded 84bps QoQ to 16.3%, led by sharp improvement in
industrial and packaging segments
• Consequently, EBITDA and PAT (after JV share) came flattish.
FY24 result highlights
• Volumes grew 26% YoY led by a 33% surge in pipes volume
• Revenue (up 10% YoY) was impacted by reduction in PVC prices
• EBITDA margin improved to 15.3% (up 223bps YoY) despite a Rs 510mn inventory
loss
• Consequently, EBITDA and PAT (after JV share) increased 29% and 24% YoY,
respectively.
• Cash surplus at Rs 11.8bn vs. Rs 7.4bn at end-FY23
• Final dividend: Rs 22 /share (FY24 total: Rs 30 /share)
Outlook
• In FY24, Supreme gained significant market share in its piping segment, volumes
of which surged 33% versus 13.7% for the industry.
• Supreme claims to have over 12% market share in the piping segment.
• New SKUs, multi-location plants, distribution expansion etc. are driving pipes
volumes for Supreme.
• In FY25, Supreme aims 20% volume growth led by piping system (25-30% growth).
Industrial and Packaging segments are expected to grow at ~10% while Consumer
products is likely to see no growth.
• Demand from Nal Se Jal program (5% revenue mix for Supreme, thin margin) is
likely to be over in next 2 years.
• Demand from Gas pipe industry is emerging as the next big opportunity.
Capex in FY25 is planned at Rs 15bn including carry forward capex of Rs 5bn
• To expand capacities across product segments at existing locations
• To put up new plants near Patna (Bihar), Vijayawada (AP), Kanpur (UP) and JNPT
port (MH)
• Current capacity: 950kt total, 730kt pipes, 90kt industrial, 90kt packaging, 23kt
consumer
• Total capacity in FY25 is likely to reach 1,050kt mainly led by pipes (835kt)
• To meet the growth in demand, Company has initiated steps to put up new plant
near JNPT Port. The site near JNPT port will facilitate easy transportation of
Protective and Performance Packaging products at economical cost in export and
domestic markets.
Piping system segment
• In FY24, pipes volume grew by 33% YoY while revenue increased by 15% due to
reduction in PVC resin prices
• Increased availability of Plastics will maintain the price level at affordable price
level.
• CPVC prices under pressure due to over capacity
• New product launch plan - It currently has 36 plastic piping Systems in the division
and plans to add another 5 new systems viz. Acoustic PP Pipe System in
collaboration with Poloplast GmbH of Austria, Polyethylene Gas Piping System,
PERT Piping System, PE single wall corrugated Pipes, and Rainwater Harvesting
System (Infiltration modules for ground recharge and storage) during FY25.
• Bath fittings and Sanitaryware business has been established well. Design center
at Pune is working extensively for various new SKUs (will go up from 421 nos to
over 1000 nos by end-FY25)
Packaging segment
• Cross Laminated Film (XF) & Products had a nominal volume growth of 1% during
FY24.
• The below normal & erratic rains in several parts of the country adversely
impacted the demand for tarpaulin resulting in de-growth.
• Exports grew by 9% YoY with a presence in 35 countries across the globe.
• All the equipment’s for manufacturing Cross Plastics are in the final stages of
installation & the trial production is likely to commence in 1QFY25.
• Performance Films division expects to increase its revenue of value-added
products with distinct brand names and positioning itself as a trusted provider of
high-quality products. Division is now registered under EPR (Extended Producer
Responsibility) and is supporting Government initiatives on sustainability through
Plastic waste management.
• Protective Packaging division’s volume/value grew 15%/12% in FY24 on the back
of developing new applications for varied industries keeping customer’s need in
mind. New product development, adopting new technologies in manufacturing
and focusing on export business is likely to yield positive results both in terms of
growth and profitability.
Industrial Component segment
• Sluggish demand from appliances and white goods sector impacted performance
in FY24.
• Auto sector continued to look promising though.
• It executed major orders received for supply of EVM and VVPAT sub-assemblies in
the last 2 years.
• Expects medium- and long-term scenarios to be bullish, supported by various
reforms of Government and upbeat in the overall economy.
Material Handling segment
• Sectors like Automobile, Engineering drove 11% volume growth in FY24 whereas
FMCG, Whitegoods, E Commerce companies stagnated due to higher inflation
and price rise in essentials.
• Growth in injection and roto moulded pallets was good. New range of Dustbin
models were launched.
• Supreme has been a trusted associate and supplier to major soft beverages
companies benefited with increased demand and the same is likely to be
continued.
Furniture segment
• Soft performance continued in FY24, in line with the industry trend.
• Supreme has identified different segments of plastic furniture such as Premium
Products, Almirah, Blow Molded Tables & School Furniture to drive its growth.
Composite Cylinder segment
• Performance in FY24 remained subdued as purchases from its major customer
IOCL has not happened as projected earlier.
• Discussion with other OMCs is also continuing as they are exploring to introduce
composite Cylinders in their portfolio.
• The company is working on new exports marketing and discussing with various
agencies for supplies in various other countries.
Exhibit 1: Supreme Industries – Quarterly performance (consolidated)
Total Income 25,983 23,686 23,087 24,491 30,079 16 23 1,01,343 92,016 10
Employee costs 997 1,032 1,059 1,098 1,233 24 12 4,422 3,748 18
Other expenses 2,900 2,878 3,109 3,200 3,677 27 15 12,864 10,279 25
EBITDA 4,803 3,216 3,562 3,788 4,907 2 30 15,473 11,997 29
Depreciation 721 721 719 772 772 7 (0) 2,984 2,634 13
Finance costs 40 17 16 52 77 91 50 161 80 101
Other income 114 142 127 207 181 59 (13) 657 298 121
PBT 4,156 2,621 2,955 3,172 4,239 2 34 12,985 9,580 36
Tax 1,052 678 763 818 1,097 4 34 3,357 2,460 36
PAT (before JV) 3,103 1,942 2,192 2,354 3,141 1 33 9,629 7,121 35
Share of profit/(loss) of JVs 491 213 240 208 407 (17) 95 1,069 1,533 (30)
PAT (after JV) 3,594 2,155 2,432 2,562 3,548 (1) 39 10,697 8,653 24
EPS (Rs) 28.3 17.0 19.1 20.2 27.9 (1) 39 84.2 68.1 24
Gross margin 33.5 30.1 33.5 33.0 32.6 (85) (38) 32.3 28.3 404
Employee costs 3.8 4.4 4.6 4.5 4.1 26 (38) 4.4 4.1 29
Other expenses 11.2 12.1 13.5 13.1 12.2 107 (84) 12.7 11.2 152
EBITDA margin 18.5 13.6 15.4 15.5 16.3 (217) 84 15.3 13.0 223
Depreciation 2.8 3.0 3.1 3.2 2.6 (21) (59) 2.9 2.9 8
Finance costs 0.2 0.1 0.1 0.2 0.3 10 5 0.2 0.1 7
Other income 0.4 0.6 0.5 0.8 0.6 16 (24) 0.6 0.3 32
PBT 16.0 11.1 12.8 12.9 14.1 (190) 114 12.8 10.4 240
Effective tax rate 25.3 25.9 25.8 25.8 25.9 57 10 25.8 25.7 18
PAT (after JV) 13.8 9.1 10.5 10.5 11.8 (204) 134 9.5 7.7 176
Segment Revenue (Rs m) YoY (%) QoQ (%) YoY (%)
Plastic Piping System 17,708 16,261 15,093 16,437 21,525 22 31 69,316 60,375 15
Packaging Products 3,231 3,231 3,522 3,540 3,764 17 6 14,057 13,191 7
Industrial Products 3,687 2,985 3,258 3,320 3,516 (5) 6 13,078 13,416 (3)
Consumer Products 1,211 1,049 1,054 1,123 1,184 (2) 5 4,410 4,446 (1)
Others 147 160 160 72 90 (39) 25 482 587 (18)
Volume (t) YoY (%) QoQ (%) YoY (%)
Plastic Piping System 1,12,293 1,17,274 1,02,929 1,22,003 1,57,895 41 29 5,00,101 3,75,046 33
Packaging Products 13,532 13,568 14,890 14,998 15,051 11 0 58,507 54,242 8
Industrial Products 16,508 13,409 15,425 16,231 16,871 2 4 61,936 58,960 5
Consumer Products 5,081 4,293 4,519 4,793 4,652 (8) (3) 18,257 18,253 0
Total 1,47,414 1,48,544 1,37,763 1,58,025 1,94,469 32 23 6,38,801 5,06,501 26
Realisation (Rs per kg) YoY (%) QoQ (%) YoY (%)
Plastic Piping System 158 139 147 135 136 (13) 1 139 161 (14)
Packaging Products 239 238 236 236 250 5 6 240 243 (1)
Industrial Products 224 223 211 205 209 (7) 2 211 228 (7)
Consumer Products 238 245 232 234 254 7 9 241 244 (1)
Total Average 176 159 168 155 155 (12) (0) 159 182 (13)
Segment EBIT (%) YoY (bps) QoQ (bps) YoY (bps)
Plastic Piping System 18.6 11.9 13.3 13.0 13.6 (499) 64 13.0 11.3 174
Packaging Products 7.7 7.9 13.6 13.1 18.0 1,031 487 13.4 6.9 641
Industrial Products 10.0 6.3 7.7 8.9 11.2 123 231 8.7 9.2 (57)
Consumer Products 17.8 16.9 16.6 17.4 17.3 (44) (7) 17.1 15.3 183
EBIT /Kg YoY (%) QoQ (%) YoY (%)
Plastic Piping System 29 17 19 17 19 (37) 6 18 18 (1)
Packaging Products 18 19 32 31 45 145 45 32 17 90
Industrial Products 22 14 16 18 23 5 28 18 21 (13)
Consumer Products 42 41 39 41 44 4 8 41 37 11
Share of Value-add products (%) 36.8 32.3 41.2 35.1 39.8 37.3 36.7
* Note: Segment EBIT margin is as per reported numbers and not adjusted for the unallocable expenses/income
Valuation and View

SI is the largest plastic processor in India selling ~0.6mn tonnes of plastic products
across five segments. Its strengths are its brand equity, leadership position in key
segments, regular capacity additions and focus on value-added products (VAP). It has
25 plants across India, with three envisaged over the next year.
After 33% surge in pipes volume growth in FY24 (vs. 13.7% growth for industry),
management’s ambition to grow 25-30% in FY25 is quite encouraging. A Rs 15bn
capex plan for FY25 (incl. Rs 5bn c/f capex) will enhance total capacity to over 1mn
ton (led by pipes capacity of 835kt).
On robust guidance, we increased our earnings estimates by ~5% after 4Q. We now
expect 19%/21%/20% CAGR in revenue/ EBITDA/PAT over FY24-26E, on strong 18%
volume CAGR and normalised EBITDA margins (15.5%+). Despite high capex, SI’s
strong FCFs and healthy RoE/RoCE (~22%/30% in FY26E) will sustain. On rich
valuation, we maintain HOLD with a revised TP of Rs 5,215 (45x core FY26E P/E;
earlier Rs 4,658 at 42x).
Revenue (Rs bn) 117 138 121 143 4 4 121 143 - - 120 139 (1) (3)
EBITDA 18,019 21,648 18,797 22,583 4 4 18,797 22,583 - - 18,907 22,247 1 (1)
EBITDA margin (%) 15.4 15.6 15.5 15.7 15 16 0.0 0.0
PAT 12,314 14,882 12,910 15,441 5 4 12,910 15,441 - - 13,194 15,512 2 0
EPS 97 117 102 122 102 122 103 122

68
51
+1 SD: 38
34
Mean: 29
17 -1 SD: 19
0
Jun-19
Dec-19
Nov-23
Jun-24
Jul-20
Oct-22
Feb-21
Aug-21
May-23
Mar-22
Risks
• High and volatile raw material prices could suppress demand and margins.
• Lower-than-expected growth in its business divisions pose downside to our
estimates.
Net revenues (Rs mn) 77,728 92,015 1,01,343 1,21,361 1,43,766 Share capital 254 254 254 254 254
Growth (%) 22.3 18.4 10.1 19.8 18.5 Net worth 38,444 44,021 51,088 59,551 69,910
Direct costs 53,532 65,992 68,584 81,270 95,957 Total debt 40 23 61 60 59
- Depreciation 2,295 2,634 2,984 3,438 3,926 Net Intangible assets 76 55 624 624 624
Interest Exp 52 80 161 44 88 CWIP 1,546 837 1,437 437 237
PBT 10,274 9,579 12,985 15,825 19,080 Investments (Strategic) 4,702 5,713 6,254 6,754 7,254
Effective tax rate (%) 25.6 25.7 25.8 25.8 25.8 Investments (Financial) 57 61 127 5,627 12,127
+ Associates/(Minorities) 2,044 1,533 1,069 1,175 1,293 Current Assets 20,707 22,228 22,592 27,372 31,874
Net Income 9,685 8,652 10,697 12,910 15,441 Cash 5,262 7,461 11,873 5,720 6,095
FDEPS growth (%) (1.0) (10.7) 23.6 20.7 19.6 Contingent Liabilities 684 611 - - -

- Incr./(decr.) in WC 4,941 778 (1,796) 3,053 2,109 P/B (x) 19.8 17.3 14.9 12.8 10.9
- Capex 4,699 4,218 6,855 9,000 4,800 ROIC (%) 34.9 26.9 33.8 35.4 37.5
Free cash-flow 3 4,685 7,274 2,603 10,693 DPS (Rs per share) 24.0 26.0 30.0 35.0 40.0
Acquisitions - - - - - Dividend yield (%) 0.4 0.4 0.5 0.6 0.7
- Dividend 2,922 3,049 3,557 4,447 5,082 Dividend payout (%) 31.5 38.2 35.6 34.4 32.9
+ Debt raised (11) - - (1) (1) Receivables (days) 22 20 18 20 20
- Fin Investments (178) (188) (237) 6,000 7,000 Inventory (days) 59 55 49 50 50
- Misc. Items (CFI + CFF) (325) (366) (451) (1,692) (1,765) Payables (days) 37 36 37 35 35
Net cash-flow (2,426) 2,191 4,406 (6,153) 375 CFO:PAT (%) 49 103 132 90 100
COMPANY SECTION
TILES & BATHWARE
11 June 2024
Systematix
Building Materials
Carysil (BUY, TP: Rs 1,147)

Soft 4Q; healthy order book from US and UK to drive growth
COMPANY UPDATE Carysil’s (CARYSIL) soft 4Q (revenue/EBITDA/PAT flattish QoQ) was impacted by
Sector: Building Materials Rating: BUY muted demand in India and key European regions, increased freight due to red sea
CMP: Rs 861 Target Price: Rs 1,147 crisis, integration of United Granite and opening of new experience centers
/galleries. US and UK markets recovered strongly though. Stainless steel sinks
Stock Info revenue surged 35% QoQ as supply to IKEA began during 4Q. On robust orderbook,
Sensex/Nifty 76,490/23,259 management sticks to its guidance of Rs 10bn revenue (incl. ~Rs 1bn inorganic) and
Bloomberg CARYSIL IN 18-20% EBIDTA margin for FY25E. It expects US surface business to grow at 15-20%
Equity shares (mn) 26.8 CAGR while India revenue to grow at a faster pace (25%+ CAGR). United Granite
52-wk High/Low 1102/612
LLC, US subsidiary, is showing promising progress; raw material sourcing is shifted
Face value Rs 2
to India to save costs. The company has entered many global markets (GCC,
Australia etc.) in recent quarters. CARYSIL aims to sustain market share gain in
Quartz sinks from its European and US based competitors due to the advantage of
Financial Snapshot (Rs mn) lower manufacturing costs. Addition of new products, hiring of senior people and
Y/E Mar FY24 FY25E FY26E B2B team’s focus on projects will drive sales. Post weak 4Q, we cut earnings
Net sales 6,838 9,052 11,154 estimates by 7-10% on lower margin expectations. We now estimate 28%/32%/45%
EBITDA 1,287 1,795 2,234
CAGR in revenue/EBITDA/PAT over FY24-26E (FY19-24: 22%/26%/27%) with 23% RoCE
OPM (%) 18.8 19.8 20.0
PAT (adj.) 587 943 1,230
in FY26E. On robust outlook, we maintain BUY with an unchanged target price of Rs
EPS (Rs) 21.9 35.2 45.9 1,147 (25x FY26E P/E). (concall KTAs)
PE (x) 37.2 23.2 17.8 4Q - soft quarter, flattish QoQ: Consol. revenue/EBITDA/PAT grew 31%/32%/25%
P/B (x) 6.2 5.0 4.0 YoY (flattish QoQ). Gross margin (59.1%, up 644bps QoQ) was aided by greater
EV/EBITDA (x) 19.2 13.8 11.1 revenue mix of USA and IKEA. EBITDA margin (18.1%, down 61bps QoQ) was
RoE (%) 16.6 21.4 22.3
restricted by increased freight costs (2-3% of export sales) due to Red Sea issues
RoCE (%) 17.1 20.9 23.0
(shipment delayed by 3-4 weeks). Integration of United Granite LLC and opening of
Net-D/E (x) 0.8 0.6 0.5
new experience centers/galleries also had impact.
Shareholding Pattern (%)
Mar’24 Dec’23 Sep’23
Stainless steel sinks and US/UK markets recovered well: In 4Q, domestic revenue
Promoter 43.8 43.8 43.8 dipped 9% QoQ while overseas revenue grew 4%. In terms of products, stainless
- Pledged steel sinks saw 35% QoQ surge in revenue (IKEA supply began) followed by Solid
FII 0.9 0.6 0.6 Surface (up 6% QoQ). Quartz sink (down 3% QoQ) and Appliances (down 15% QoQ)
DII 7.3 9.1 7.1 remained in slow lane. US and UK markets recovered well during FY24; Europe
Others 48.0 46.5 48.5 continued to experience subpar demand. US has seen more organic expansion; focus
Stock Performance (1-year)
in UK was on acquiring new customers.
1,125 Healthy order book and inorganic expansion to support robust outlook: On robust
969
orderbook, management sticks to its guidance of Rs 10bn revenue (incl. ~Rs 1bn
inorganic) and 18-20% EBIDTA margin for FY25E. It expects US surface business to
813
grow at 15-20% CAGR while India revenue to grow at a faster pace (25%+ CAGR,
656 driven by faucets, appliances etc.). EBITDA margin guidance of 18-20% is intact.
500 United Granite LLC, US subsidiary, is showing promising progress; RM sourcing is
shifted to India to save costs. The company has entered many global markets (GCC,
Jul-23
Oct-23
Jan-24
Apr-24
Mar-24
Dec-23
Jun-24
Jun-23
Aug-23
Sep-23
Nov-23
Feb-24
May-24
Australia etc.) in recent quarters. Hiring of senior people will also aid growth.
CARYSIL Sensex CARYSIL aims to sustain market share gain in Quartz sinks from its European and US
based competitors due to the advantage of lower manufacturing costs. Addition of
new products, participation in exhibitions and B2B team’s focus on projects will drive
sales. Its tie-up with a renowned global company (recent one is Howdens Kitchen,
UK’s leading worktop supplier, ~150k unit opportunity for CARYSIL) would help it in
expanding its kitchen appliances portfolio.

• 4Q gross margin (59.1%, up 644bps QoQ) was aided by greater mix of US sales,
IKEA supply
• 4Q EBITDA margin (18.1%, down 61bps QoQ) limited by increased freight costs (2-
3% of export sales) due to Red Sea issues (shipment delayed by 3-4 weeks)
• Integration of United Granite LLC and opening of new experience
centres/galleries also impacted margin
• US and UK markets recovered well during FY24; Europe continued to experience
subpar demand
• US has seen more organic expansion; focus in UK on acquiring new customers
• Order book stands healthy and thus expects positive trend to persist in FY25
• US surface business expected to grow at 15-20% CAGR
• India business is expected to grow at 25%+ CAGR; faucets, appliances are key
categories
• EBITDA margin guidance of 18-20% intact
• United Granite LLC, US subs, is showing promising progress; raw material sourcing
shifted from India to save costs
• Entered many global markets in GCC, Australia, in recent quarters
• Hiring of senior people will aid growth
• Started commercial production 3-4 models of Chimneys
• Process of Rs 1.5bn QIP underway
• Increasing brand presence in global markets; B2C revenue mix (50-55%, 30-35%
global market, ~20% India)
• Gross margin profile - Quartz sink (48-50%), Surface (26-27%), Steel sink (30-35%),
Appliances (40%)
4QFY24 - soft quarter, flattish QoQ

• Revenue/EBITDA/PAT up 31%/32%/25% YoY; flattish QoQ
• Gross margin strong 59.1%, up 644bps QoQ
• EBITDA margin 18.1%, down 61bps QoQ
• CU (FY24): quartz ~60%, steel sinks ~78%
• Geo mix: India ~20% (South ~27% mix), USA ~30%, UK ~25%
Exhibit 1: Carysil - Quarterly performance
Revenue 1,456 1,417 1,636 1,880 1,905 31 1 6,838 5,939 15
Raw material costs 754 709 769 890 780 3 (12) 3,149 3,061 3
Employee costs 111 129 124 174 176 58 2 603 449 34
Other expenses 328 318 413 464 604 84 30 1,799 1,356 33
EBITDA 262 261 329 352 345 32 (2) 1,287 1,074 20
Depreciation 72 72 77 81 95 31 17 324 264 23
Finance costs 38 45 47 58 58 52 (1) 209 145 44
Other income 10 12 12 9 19 88 112 53 16 236
PBT 162 156 218 222 212 31 (4) 808 681 19
Tax 37 39 62 68 55 46 (20) 224 153 47
PAT after JVs 124 116 154 153 155 25 1 579 524 10
EPS (Rs) 4.6 4.3 5.8 5.7 5.8 25 1 21.6 19.5 10
Gross margin 48.2 49.9 53.0 52.6 59.1 1,089 644 54.0 48.5 548
Employee costs 7.7 9.1 7.6 9.2 9.2 159 1 8.8 7.6 126
Other expenses 22.5 22.5 25.2 24.7 31.7 920 704 26.3 22.8 348
EBITDA margin 18.0 18.4 20.1 18.7 18.1 10 (61) 18.8 18.1 75
Depreciation 5.0 5.1 4.7 4.3 5.0 0 66 4.7 4.4 31
Finance costs 2.6 3.2 2.9 3.1 3.0 42 (8) 3.0 2.4 60
Other income 0.7 0.9 0.8 0.5 1.0 31 53 0.8 0.3 51
PBT 11.2 11.0 13.3 11.8 11.1 (1) (65) 11.8 11.5 35
Effective tax rate 23.0 25.3 28.3 30.8 25.8 276 (504) 27.7 22.4 533
PAT 8.6 8.2 9.5 8.2 8.3 (32) 11 8.5 8.9 (36)
Revenue break-up YoY (%) QoQ (%) YoY (%)
Exports 724 676 898 973 1,000 38 3 3,547 3,138 13
Overseas (STL UK +
409 425 393 519 551 35 6 1,887 1,485 27
others)
Domestic 323 316 345 388 355 10 (9) 1,404 1,316 7
Revenue mix %
Exports 50 48 55 52 52 52 53
Overseas (STL UK +
28 30 24 28 29 28 25
others)
Domestic 22 22 21 21 19 21 22
Segment Revenue YoY (%) QoQ (%) YoY (%)
Quartz Sink 712 650 867 979 950 33 (3) 3,446 3,088 12
Steel Sink 189 166 213 159 215 13 35 752 772 (3)
Appliances/Others 205 177 162 223 190 (7) (15) 752 653 15
Solid Surface (STL UK +
409 425 393 519 551 35 6 1,887 1,485 27
Others)
Revenue Mix %
Quartz Sink 47 46 53 52 50 50 51
Steel Sink 12 12 13 8 11 11 13
Appliances/Others 14 12 10 12 10 11 11
Solid Surface (STL UK +
27 30 24 28 29 28 25
Others)
Valuation and View

CARYSIL is the only company in Asia and among four worldwide to manufacture
quartz kitchen sinks with Schock technology (Germany). The company also
manufactures stainless steel kitchen sinks (with core focus on Quadro sinks), kitchen
appliances and bathroom fittings. Factors that could drive CARYSIL’s strong growth
are: a) product supply approvals from world’s leading retailers such as IKEA, Grohe,
Menard, etc., are testimonies to its product quality, systems and processes, b)
significant capacity addition in view of strong demand visibility from its key
customers, and c) customised and dedicated moulds for key customers, which
provide comfort in terms of quality and supply assurance to them.
On robust orderbook, management sticks to its guidance of Rs 10bn revenue (incl.
~Rs 1bn inorganic) and 18-20% EBIDTA margin for FY25E. On strong demand and at
~70% capacity utilisation, CARYSIL is thinking to resume quartz sinks deferred capex
plan. Post weak 4Q, we cut earnings estimates by 7-10% on lower margin
expectations. We now estimate 28%/32%/45% CAGR in revenue/EBITDA/PAT over
FY24-26E (FY19-24: 22%/26%/27%) with 23% RoCE in FY26E. On robust outlook, we
maintain BUY with an unchanged target price of Rs 1,147 (25x FY26E P/E).
Revenue 9,232 11,317 9,052 11,154 (2) (1) 9,052 11,154 - - 8,743 10,463 (3) (6)
EBITDA 1,917 2,350 1,795 2,234 (6) (5) 1,795 2,234 - - 1,699 2,074 (5) (7)
EBITDA margin (%) 20.8 20.8 19.8 20.0 20 20 19.4 19.8
PAT 1,050 1,327 943 1,230 (10) (7) 943 1,230 - - 888 1,148 (6) (7)
EPS 39 50 35 46 35 46 33 44
50
38
+1 SD 31
25
Mean 21
13
-1 SD 10
0
Feb-21
Jun-19
Dec-19
Nov-23
Jun-24
Jul-20
Oct-22
Aug-21
Mar-22
May-23
Key risks
• Economic slowdown in domestic and global markets could hamper the demand
for the company’s products, which are discretionary in nature.
• A rising interest rate scenario could increase the interest cost burden on loans
taken for capex and working capital requirements.
• As ~80% revenue comes from exports, any large currency fluctuations could
significantly impact earnings.
FINANCIALS
Growth (%) 56.2 22.7 15.1 32.4 23.2 Net worth 2,537 3,034 3,540 4,402 5,526
Direct costs 2,095 3,024 3,149 4,132 5,069 Total debt 1,373 2,209 2,982 3,032 3,082
Gross Margin (%) 56.7 49.1 54.0 54.4 54.6 Minority interest 32 37 41 41 41
SG&A 1,711 1,841 2,402 3,125 3,851 DT Liability/ (Asset) 46 52 15 20 25
- Depreciation 177 264 324 380 442 Net Intangible assets 257 1,052 1,524 1,524 1,524
PBT 861 681 808 1,261 1,647 Investments (Strategic) - - - - -
Effective tax rate (%) 24.2 22.4 27.7 25.5 25.5 Investments (Financial) - - - - -
+ Associates/(Minorities) 2 3 3 3 3 Current Assets 3,149 3,583 4,181 4,708 5,585
Net Income 648 524 587 943 1,230 Cash 113 122 125 157 173
Adjusted income 648 524 587 943 1,230 Current Liabilities 1,545 1,792 1,868 2,130 2,403
FDEPS (Rs/share) 24 20 22 35 46 Capital Deployed 3,988 5,331 6,578 7,496 8,674
FDEPS growth (%) 65.5 (19.1) 12.0 60.7 30.5 Contingent Liabilities 3 - - - -

EBIT (incl. other income) 334 314 458 1,415 1,792 P/E (x) 35.7 44.0 39.3 24.5 18.8
Non-cash items 177 264 324 380 442 EV/EBITDA (x) 23.6 23.4 20.2 14.5 11.6
OCF before WC changes 511 578 783 1,795 2,234 EV/sales (x) 5.0 4.2 3.8 2.9 2.3
Incr./(decr.) in WC 185 322 664 246 583 P/B (x) 9.1 7.6 6.5 5.2 4.2
Others including taxes (191) (456) (460) 328 426 RoE (%) 25.5 17.3 16.6 21.4 22.3
Operating cash-flow 516 712 578 1,222 1,225 RoCE (%) 27.4 17.7 17.1 20.9 23.0
Capex 731 577 919 1,000 1,000 ROIC 28.5 18.0 17.3 21.2 23.3
Free cash-flow (215) 134 (340) 222 225 DPS (Rs per share) 2.4 2.0 2.0 3.0 4.0
Dividend 64 31 55 80 107 Dividend payout (%) 9.9 10.2 9.1 8.5 8.7
Equity raised - 5 3 - - Net debt/equity (x) 0.5 0.7 0.8 0.6 0.5
Debt raised 360 836 774 50 50 Receivables (days) 76 63 74 65 65
Fin Investments - 795 101 - - Inventory (days) 79 80 92 80 80
Misc. Items (CFI + CFF) 105 161 233 160 151 Payables (days) 60 48 46 45 45
Net cash-flow (25) (12) 47 31 17 CFO:PAT (%) 80 136 99 130 100
11 June 2024
Systematix
Building Materials
Cera Sanitaryware (HOLD, TP: Rs 7,684)

Soft demand to persist till 1QFY25; an ambitious 16% revenue
CAGR target set for FY24-27E
COMPANY UPDATE Cera Sanitaryware’s (CRS) 4Q result (revenue/EBITDA/PAT up 2%/5%/ 19% YoY)
Sector: Building Materials Rating: HOLD came 6-15% ahead of our estimates driven by a strong 17.3% EBITDA margin owing
to lower A&P spend (Rs 154mn vs. Rs 240mn YoY). The company moderated
CMP: Rs 7,358 Target Price: Rs 7,684
manufacturing activity in 4Q [CU: sanitaryware (S/w) 82%, faucetware (F/w) 90%]
Stock Info due to soft demand and enough inventory. CRS expects soft demand to persist till
Sensex/Nifty 76,490/23,259 1QFY25; an ambitious 16% revenue CAGR target is set over FY24-27E and reach Rs
Bloomberg CRS IN 29bn. Gross margin (down 142bps QoQ at 53%) will remain under check due to
Equity shares (mn) 13.0 higher discounts, a high EBITDA margin (16%+) will be aided by lower A&P spend
52-wk High/Low 9,519/6,672 (FY25E/ FY24/FY23: Rs 650mn/670mn/600mn) and cost saving. Focus on premium
Face value Rs 5 and luxury segments (41% revenue mix) will also help. F/w capacity expanded by 1
lakh units to 4 lakhs (expandable to 6 lakh units when needed) having Rs 2.4bn
incremental revenue potential. S/w greenfield plant in Gujarat (Rs 1.3bn capex) is
Financial Snapshot (Rs mn) likely to be operational by FY26 end. Cash balance of ~Rs 8.3bn (Rs 1.4 added
Y/E Mar FY24 FY25E FY26E during FY24) will support company’s capex plans. We retained our earnings
Net sales 18,794 21,042 23,767 estimates post 4Q, We now expect a 13%/12%/9% CAGR in revenue/EBITDA/PAT
EBITDA 3,033 3,345 3,789 over FY24-26E (FY19-24: 7%/9%/16%). Large cash (Rs 8.28bn) could suppress RoE to
OPM (%) 16.1 15.9 15.9
~17%, but strong FCFs and high ~50% RoIC should be maintained. Maintain HOLD
PAT (adj.) 2,390 2,550 2,855
with an unchanged target price of Rs 7,684 (35x FY26 P/E). Prolonged demand
EPS (Rs) 184 196 220
PE (x) 39.2 36.7 32.8
slowdown and keen competition pose key risks to high valuation. (concall KTAs)
P/B (x) 7.0 6.2 5.5 4Q - lower A&P spend drove EBITDA/PAT beat: Revenue/EBITDA/PAT grew 2%/5%/
EV/EBITDA (x) 28.4 25.4 22.2 19% YoY (6-15% beat on our estimates). Gross margin contracted 292bps YoY and
RoE (%) 17.8 16.8 16.8 357bps QoQ to 50.8% owing to higher discounts given to channel amid soft demand
RoCE (%) 23.6 22.5 22.5
and intense competition. However, lower A&P spend (Rs 154mn vs. Rs 240mn YoY)
Net-D/E (x) (0.6) (0.6) (0.6)
led to 11% YoY decline in other expenses and drove EBITDA margin strong at 17.3%
Shareholding Pattern (%) (up 41bps YoY and 330bps QoQ). The company moderated manufacturing activity in
Mar’24 Dec’23 Sep’23 4Q (CU: S/w 82%, F/w 90%) due to soft demand and enough inventory. Net WC cycle
Promoter 54.5 54.5 54.5 was stable at 75 days; cash level stood high at Rs 8.28bn (added Rs 1.41bn in FY23).
- Pledged
FII 21.9 20.6 20.9 Soft demand to persist till 1QFY25; set an ambitious 16% revenue CAGR over FY24-
DII 6.6 8.4 8.3 27E: Sluggish demand is expected to persist till 1QFY25 owing to general election,
Others 17.0 16.5 16.3 shortage of labour and heatwaves among other factors. However, it has set an
ambitious target to grow its revenue at 16% CAGR over FY24-27E and reach Rs 29bn.
10,000
Gross margin (down 142bps QoQ at 53%) will remain under check due to higher
discounts, a high EBITDA margin (16%+) will be aided by lower A&P spend (FY25E/
9,000
FY24/FY23: Rs 650mn/670mn/600mn) and cost saving. CRS has kept prices same in
8,000 last 21 months. Focus on premium and luxury segments (41% revenue mix) will also
7,000
help. Currently, over 93,000 retailers are availing the loyalty program. CRS has now
adopted the ESOP Scheme 2024 to motivate, retain and reward the critical talent.
6,000
Oct-23
Jan-24
Apr-24
Dec-23
Jul-23
Mar-24
Aug-23
Jun-23
Nov-23
Jun-24
Sep-23
Feb-24
May-24
Increase F/w annual capacity to 0.4mn pieces; S/w greenfield plant likely
operational by FY26 end: From an asset light business model, CRS has turned focus
CERA Sensex on in-house manufacturing of value-added products. Capex in FY25 stood at Rs
622mn (incl. Rs 254mn routine one). It expanded faucets capacity by 100k units to
0.4mn in 2Q (expandable to 0.6mn when needed) having Rs 2.4bn incremental
revenue potential. Greenfield Sanitaryware plant in Gujarat (Rs 1.3bn capex) is likely
to be operational in FY26 end (acquired 80% of land). Cash balance of ~Rs 8.3bn will
support company’s capex plans.

• Sluggish demand to sustain in 1QFY25 owing to general election, shortage of
labour, heatwaves, etc
• Aims to grow revenue at an ambitious 16% CAGR to reach Rs 29bn in FY27E
• Dip in gross margin was due to higher discounts owing to soft demand and
intense competition
• Maintained high EBITDA margin on lower A&P expense and cost savings
• A&P spend: 4Q stood low at Rs 154mn vs. Rs 240mn in 4QFY23 (added 1.7% to
margin); FY25E budgeted at Rs 650mn (FY23/24: Rs 600mn/670mn)
• No price change in last 21 months
• Net WC cycle was stable at 75 days
• Cash balance of Rs 8.28bn (added Rs 1.41bn during FY23)
• Moderated manufacturing activity (Capacity Utilization: Sanitaryware 82%,
Faucetware 90%) due to slow demand and enough inventory
• Focus to gain market share in premium and luxury segments; engaging architects
to enhance visibility
• Announced the implementation of the ESOP Scheme 2024 to motivate, retain and
reward critical talent
• 93k retailers availing loyalty program
• Industry size: Sanitaryware: Rs 90-100bn; Faucetware Rs 130-140bn
Capex
• FY25E routine capex at Rs 254mn
• Increased Faucetware capacity by 100k units to 400k units
• Acquired 80% land in Gujarat by Mar’24 for the Sanitaryware greenfield plant for
Rs 1.3bn
• Will take 18 months for the plant to be operational
4Q revenue mix
• Sanitaryware (51%, down 2% YoY), Faucetware (38%, up 11% YoY), Wellness (2%,
up 100%), Tiles (9%, down 13%)
• Premium 41%, Mid 35%, Entry 24%
• Tier-1 34%, Tier-2 21%, Tier-3 45%
• 4QFY23: Premium 43%, Mid 31%, Entry 26%
FY24 revenue mix
• Sanitaryware (Rs 9.6bn, flat YoY), Faucetware (Rs 6.8bn, up 10% YoY), Wellness
(Rs 340mn, up 38% YoY), Tiles (Rs 1.9bn, flat YoY)
• Premium 43%, Mid 33%, Entry 24%
• FY23: Premium 43%, Mid 30%, Entry 27%
Lower other expenses (down 11% YoY) drove EBITDA margin to 17.3%
• Revenue up 2% YoY and 25% QoQ (6% beat)
• EBITDA/PAT up 5%/19% YoY (~15% beat)
• Gross margin 50.8%, down 292bps YoY and 357bps QoQ (52.1% estimate)
• Other expenses down 11% YoY, up 4% QoQ
• EBITDA margin 17.3%, up 41bps YoY and 330bps QoQ (15.9% estimate)
• The softness in demand observed in Q3FY24 persisted during the initial part of
Q4FY24.
Exhibit 1: Cera Sanitaryware – Quarterly performance
Revenue 5,356 4,289 4,631 4,389 5,488 2 25 18,794 18,105 4
Employee costs 554 576 585 567 581 5 3 2,309 2,147 8
Other expenses 1,417 1,072 1,095 1,204 1,256 (11) 4 4,624 4,710 (2)
EBITDA 905 704 765 614 950 5 55 3,033 3,002 1
Depreciation 83 83 89 97 97 16 0 365 326 12
Finance costs 21 13 14 16 15 (27) (2) 58 60 (4)
Other income 91 153 125 160 157 72 (2) 595 284 110
Exceptional (loss)/ gain (50) - (16) - - (16) (50)
PBT 841 760 772 662 995 18 50 3,188 2,849 12
Tax 210 193 198 147 238 13 62 775 738 5
PAT after JV/asso. 628 563 569 509 749 19 47 2,390 2,094 14
EPS (Rs) 48.2 43.3 43.8 39.1 57.6 19 47 183.8 161.0 14
As % of Revenue YoY (bps) QoQ (bps) YoY (bps)
Gross margin 53.7 54.8 52.8 54.4 50.8 (292) (357) 53.0 54.5 (142)
Employee costs 10.3 13.4 12.6 12.9 10.6 24 (232) 12.3 11.9 43
Other expenses 26.5 25.0 23.6 27.4 22.9 (357) (455) 24.6 26.0 (141)
EBITDA margin 16.9 16.4 16.5 14.0 17.3 41 330 16.1 16.6 (44)
Depreciation 1.6 1.9 1.9 2.2 1.8 20 (44) 1.9 1.8 14
Finance costs 0.4 0.3 0.3 0.4 0.3 (11) (8) 0.3 0.3 (2)
Other income 1.7 3.6 2.7 3.6 2.9 116 (77) 3.2 1.6 160
PBT 15.7 17.7 16.7 15.1 18.1 241 305 17.0 15.7 123
Effective tax rate 24.9 25.4 25.6 22.2 23.9 (104) 174 24.3 25.9 (160)
PAT 11.8 13.2 12.4 11.7 13.8 200 205 12.8 11.7 118
Revenue break-up (Rs mn) YoY (%) QoQ (%) YoY (%)
Sanitaryware 2,827 2,277 2,350 2,267 2,771 (2) 22 9,664 9,662 0
Faucetware 1,867 1,478 1,639 1,594 2,072 11 30 6,783 6,153 10
Wellness 53 68 102 59 109 105 85 338 245 38
Tiles 587 449 526 445 510 (13) 15 1,931 1,933 (0)
Revenue Mix (%)
Sanitaryware 53 53 51 52 51 52 54
Faucetware 35 35 36 37 38 36 34
Wellness 1 2 2 1 2 2 1
Tiles 11 11 11 10 9 10 11
Valuation and View

We like CRS for its leading position in sanitaryware (3rd largest in India) and faucets,
comprehensive product portfolio, wide distribution reach and strong brand
presence. Healthy FCF generation even during demand slowdown reflects its brand
power and the company’s financial discipline.
From an asset light business model, CRS has turned focus on in-house manufacturing
of value-added products. Faucets capacity expanded by 1 lakh units to 4 lakhs
(expandable to 6 lakh units when needed) at Rs 410mn capex having Rs 2.4bn
incremental revenue. Greenfield Sanitaryware plant in Gujarat (Rs 1.3bn capex) is
likely to be operational by FY26 end. Cash balance of Rs 8.28bn (Rs 1.41 added during
FY24) will support company’s capex plans. A Rs 29bn revenue target in FY27E at a
16% CAGR looks ambitious.
We retained our earnings estimates post 4Q, We now expect a 13%/12%/9% CAGR in
revenue/EBITDA/PAT over FY24-26E (FY19-24: 7%/9%/16%). Large cash (Rs 8.28bn)
could suppress RoE to ~17%, but strong FCFs and high ~50% RoIC should be
maintained. Maintain HOLD with an unchanged target price of Rs 7,684 (35x FY26
P/E). Prolonged demand slowdown and keen competition pose key risks to high
valuation.
Revenue 20,708 23,184 21,042 23,767 2 3 21,042 23,767 - - 20,798 23,710 (1) (0)
EBITDA 3,347 3,739 3,345 3,789 (0) 1 3,345 3,789 - - 3,370 3,899 1 3
EBITDA margin (%) 16.2 16.1 15.9 15.9 16 16 16.2 16.4
PAT 2,550 2,855 2,550 2,855 (0) 0 2,550 2,855 - - 2,630 3,047 3 7
EPS 196 220 196 220 196 220 203 234
58
49
39 +1 SD 39
Mean 33
30
-1 SD 28
20
Jun-19
Jun-24
Nov-23
Dec-19
Jul-20
Oct-22
Feb-21
Apr-23
Aug-21
Mar-22
Risks
• Prolonged slowdown in demand of its products owing to weakness in real estate
activities
• Intensifying competition from the organized as well as the non-regulated
(informal) sector
Growth (%) 18 25 4 12 13 Net worth 10,152 11,726 13,458 15,162 17,042
Direct costs 6,836 8,246 8,828 9,740 11,005 Total debt (incl. Pref) 657 745 667 637 607
Effective tax rate (%) 26.8 25.9 24.3 25.5 25.4 Investments (Financial) 5,620 6,628 8,025 9,025 10,025
+ Associates/(Minorities) (18) (16) (23) (25) (28) Current Assets 5,342 6,313 6,189 6,814 7,567
Net Income 1,511 2,094 2,390 2,550 2,855 Cash 243 262 372 254 264
FDEPS (Rs) 116.2 161.0 183.8 196.1 219.5 Capital Deployed 11,305 12,953 14,735 16,425 18,291
FDEPS growth (%) 50 39 14 7 12 Contingent Liabilities 258 - - - -

EBIT (incl other income) 2,021 2,795 2,624 2,935 3,329 P/E (x) 63.3 45.7 40.0 37.5 33.5
- Incr./(decr.) in WC 849 1,018 217 408 506 P/B (x) 9.4 8.2 7.1 6.3 5.6
Operating cash-flow 890 1,624 2,361 2,160 2,409 RoCE (%) 20.3 24.4 23.6 22.5 22.5
- Capex 150 383 622 810 810 ROIC 37.0 48.3 49.7 50.2 50.7
Free cash-flow 740 1,241 1,738 1,350 1,599 DPS (Rs per share) 35.0 50.0 60.0 65.0 75.0
- Dividend 169 455 650 845 975 Dividend payout (%) 30.1 31.1 32.7 33.2 34.2
+ Debt raised 214 (13) (49) (30) (30) Receivables (days) 42 38 39 39 39
- Fin Investments 601 701 843 1,000 1,000 Inventory (days) 74 77 71 70 69
Net cash-flow 65 (26) 97 (118) 10 CFO:PAT (%) 59 78 99 85 84
11 June 2024
Systematix
Building Materials
Kajaria Ceramics (HOLD, TP: Rs 1,233)

Demand uptick likely July onward; long-term growth drivers intact
COMPANY UPDATE Kajaria Ceramics’s (KJC) weak 4Q [tile-volume/revenue up 6%/1% (inline), EBITDA/
Sector: Building Materials Rating: HOLD PAT down 2%/5% YoY (~10% miss)] was due to lower gross- and EBITDA-margin
(13.9%, down 74bps YoY; 15.5% estimate). NWC cycle (stable at 58 days) and cash
CMP: Rs 1,239 Target Price: Rs 1,233 levels (up Rs 1.1bn at Rs 3.5bn) remained healthy at FY24 end. In FY24, Indian tile
Stock Info industry volume was flattish while KJC’s volume grew 6% YoY. For FY25, KJC
Sensex/Nifty 76,490/23,259 expects demand uptick from July and aims for a low double digit volume growth.
Bloomberg KJC IN Lower power & fuel costs would support 15%+ EBITDA margin. The Indian tile
Equity shares (mn) 159.3 Industry volume is expected to grow at 6-8% CAGR while KJC aims 11-13% CAGR
52-wk High/Low 1,490/1,146 over next few years, led by tier 3/4 cities. KJC has set a 3-year mission to achieve
Face value Rs 1 150mn sqm tile volume, Rs 65bn revenue (tile 55bn, bathware 6.75bn, plywood
M-Cap Rs 197bn/USD 2.4bn 1.7bn) and ~15.5% EBITDA margin. It plans to expand its presence in over 2,000
3-m Avg turnover USD 3.8mn towns in a few years from 1,000 currently. To penetrate more in government
Financial Snapshot (Rs mn) projects, it aims to deploy 35 sales force from 10 currently. After 4Q, we cut
Y/E Mar FY24 FY25E FY26E earnings estimates by ~5% on marginal reduction in tiles volume, realization and
Net sales 45,784 51,056 57,456 margin estimates. We now expect 12%/12%/14%/15% CAGR in tile-volume/
EBITDA 6,997 7,956 9,125 revenue/EBITDA/PAT over FY24-26E (FY19-24: 6%/9%/9%/13%), with ~28% RoIC
OPM (%) 15.3 15.6 15.9 and ~Rs 3.3bn annual FCF. While long-term structural drivers are intact, on soft
PAT (adj.) 4,221 4,788 5,612 near-term outlook and low margin of safety in scrip at ~35x FY26E P/E, we maintain
EPS (adj.) (Rs) 26.5 30.1 35.2
HOLD rating with an unchanged target price of Rs 1,233 (35x FY26E P/E). (analyst
PE (x) 46.0 40.6 34.6
meet KTAs)
P/B (x) 7.4 6.8 6.1
EV/EBITDA (x) 27.4 23.9 20.7 4Q - tile-volume/revenue inline; lower margins led to 10% EBITDA/PAT miss: Tile
RoE (%) 16.1 16.7 17.7 volume/revenue grew 6%/1% YoY (inline); NSR dipped 5% due to change in product
RoCE (%) 21.0 21.7 23.1 mix and rising competitive intensity. Overall revenue (up 3% YoY, inline) aided by
Net-D/E (x) (0.1) (0.1) (0.2) healthy growth in other segments (sanitaryware up 13%, plywood up 74%, adhesives
Shareholding Pattern (%) up 24%). EBITDA/PAT declined 2%/5% YoY and were ~10% below our estimates.
Mar’24 Dec’23 Sep’23 EBITDA margin contracted 74bps YoY at 13.9% (vs. 15.5% estimate), driven by gross
Promoter 47.5 47.5 47.5 margin (down 203bps YoY at 53.4%). In FY24, tile volume/revenue grew 6%/3% YoY
- Pledged (vs. flattish growth for the industry). Revenue/EBITDA/PAT grew 4%/18%/23% YoY;
FII 19.2 18.3 18.5 EBITDA margin expanded to 15.3%. NWC cycle was stable at 58 days while cash
DII 24.9 25.5 25.4 levels increased by Rs 1.1bn during FY24 to Rs 3.5bn.
Others 8.4 8.7 8.6
Soft tile demand likely to recover July’24 onward; long-term structural drivers
Stock Performance (1-year) intact: In FY24, Indian tile industry volume was flattish while KJC’s volume grew 6%
1,600 YoY [mix (volume, value) - ceramics (43%, 38%), PVT (26%, 26%), GVT (31%, 36%)].
1,475 For FY25, management expects low double digit volume growth on the exports
1,350
momentum likely to sustain and rub-off of strong real estate demand. Lower power
& fuel costs would support 15%+ EBITDA margin. The Indian tile Industry volume is
1,225
expected to grow at 6-8% CAGR while KJC aims 11-13% CAGR over next few years,
1,100 led by tier 3/4 cities. KJC has set a 3-year mission to achieve 150mn sqm tile volume,
Jan-24
Oct-23
Apr-24
Jul-23
Dec-23
Mar-24
Jun-23
Nov-23
Aug-23
Sep-23
Feb-24
May-24
Jun-24
Rs 65bn revenue (tiles 55bn, bathware 6.75bn, plywood 1.7bn) and ~15.5% EBITDA
margin. KJC plans to expand its presence in over 2,000 towns in few years from 1,000
KAJARIA Sensex currently. To penetrate more in government projects, it aims to deploy 35 sales
people from 10 currently. (3-year mission presentation link)
Near-term outlook soft; maintain HOLD with a lower Rs 1,233 TP: Post 4Q, we cut
earnings estimates by ~5% on marginal reduction in tiles volume, realization and
margin estimates. While long-term structural drivers are intact, on soft near-term
outlook and low margin of safety in scrip at ~33x FY26E P/E. Maintain HOLD.
May’24 Analyst Meet KTAs (3-year mission presentation link)

Outlook
• FY25E: low double digit volume growth with 15%+ EBITDA margin given the
exports momentum likely to sustain and rub-off of strong real estate demand
• Tile Industry volume likely to grow at 6-8% CAGR while Kajaria aims 11-13% CAGR
over next few years
• Tier 3/4 cities to grow faster than bigger cities
• To set up a tile adhesive plant at Gailpur (Raj.) at Rs 150mn capex, having 36kt
annual capacity
3-year mission
• Tile: 150mn sqm volume, Rs 55bn revenue; 15-15.5% EBITDA margin
• Overall: Rs 65bn (tiles 55bn, bathware 6.75bn, plywood 1.7bn)
Others
• Currently present in 1000 towns > aims to expand in 2000 towns in few years
• Focus on govt projects - aims to deploy 35 sales force from 10 currently
• Tile Industry size FY24 - total Rs 620bn (420bn domestic, 195bn exports)
Export dynamics
• US, Russia, Europe - key export markets; expected to grow 15-20% in FY25 as well
• US is only 7% of India's exports so any increase in duties won't impact the overall
export scenario
4QFY24: Tiles volume/revenue grew 6%/1% YoY (inline)

• Revenue up 3% YoY (inline)
• EBITDA/PAT declined 2%/5% YoY and were ~10% below our ests
• EBITDA margin contracted 74bps YoY at 13.9% (vs. 15.5% est), driven by gross
margin (down 203bps YoY at 53.4%)
• Tiles: volume/revenue 6%/1% YoY (inline); blended NSR dipped 5% YoY
• Revenues of Sanitaryware (up 13% YoY), Plywood (up 74%) and Adhesives (up
24%) grew healthy
FY24: Tiles volume/revenue grew 6%/3% YoY

• Tile industry volume flattish while Kajaria grew 6% YoY
• Mix (volume, value): Ceramics (43%, 38%), PVT (26%, 26%), GVT (31%, 36%)
• Revenue/EBITDA/PAT up 4%/18%/23% YoY
• EBITDA margin 15.3%
• NWC cycle was stable at 58 days
• Cash levels increased by Rs 1.1bn during FY24 at Rs 3.5bn
Exhibit 1: Kajaria Ceramics - Quarterly performance
Revenue 12,048 10,642 11,216 11,518 12,408 3 8 45,784 43,819 4
Employee costs 1,164 1,137 1,300 1,319 1,297 11 (2) 5,053 4,612 10
Power & Fuel 2,414 1,937 2,211 2,395 2,118 (12) (12) 8,661 10,554 (18)
Other expenses 1,343 1,159 1,327 1,324 1,494 11 13 5,304 4,663 14
EBITDA 1,759 1,692 1,797 1,788 1,720 (2) (4) 6,997 5,920 18
Depreciation 343 305 361 389 425 24 9 1,480 1,329 11
Finance costs 72 53 43 50 66 (9) 33 211 223 (5)
Other income 104 93 83 113 174 67 55 462 336 38
Exceptional (loss)/income (43) - - - - - (79)
PBT 1,406 1,427 1,477 1,462 1,403 (0) (4) 5,768 4,625 25
Tax 298 336 366 379 354 19 (7) 1,435 1,163 23
Non-controlling stake (27) (16) (29) (38) (18) (101) (17)
PAT (after JV/associate) 1,080 1,075 1,080 1,042 1,024 (5) (2) 4,221 3,445 23
EPS (Rs) 6.8 6.7 6.8 6.5 6.4 (5) (2) 26.5 21.6 23
Gross margin 55.4 55.7 59.2 59.3 53.4 (203) (584) 56.8 58.8 (194)
Emp cost 9.7 10.7 11.6 11.5 10.5 79 (100) 11.0 10.5 51
Power & Fuel 20.0 18.2 19.7 20.8 17.1 (297) (373) 18.9 24.1 (517)
Other exp 11.1 10.9 11.8 11.5 12.0 90 55 11.6 10.6 94
EBITDA margin 14.6 15.9 16.0 15.5 13.9 (74) (166) 15.3 13.5 177
Dep 2.8 2.9 3.2 3.4 3.4 58 5 3.2 3.0 20
Interest 0.6 0.5 0.4 0.4 0.5 (7) 10 0.5 0.5 (5)
Other income 0.9 0.9 0.7 1.0 1.4 54 43 1.0 0.8 24
Effective tax rate 21.2 23.5 24.8 25.9 25.2 401 (72) 24.9 25.1 (26)
PAT margin 9.0 10.1 9.6 9.0 8.3 (71) (79) 9.5 7.9 156
Segment Revenues YoY (%) QoQ (%) YoY (%)
Own Manuf. (tiles) 5,994 5,393 5,705 5,791 6,062 1 5 22,951 22,935 0
Subsidiaries (tiles) 1,867 1,781 1,825 1,995 2,255 21 13 7,856 7,059 11
Outsourcing/Import (tiles) 2,980 2,518 2,343 2,343 2,599 (13) 11 9,803 9,519 3
Tiles - Total 10,841 9,692 9,872 10,128 10,917 1 8 40,609 39,513 3
Sanitary ware / Faucets 904 837 853 922 1,023 13 11 3,635 3,157 15
Plywood 188 143 235 340 327 74 (4) 1,044 773 35
Adhesives 115 96 130 128 143 24 12 496 376 32
Tiles sales volume (msm) YoY (%) QoQ (%) YoY (%)
Own Manufacturing 15.2 13.8 14.8 15.3 16.1 6 5 59.9 57.3 5
Subs/JV's 5.9 4.6 4.8 5.3 6.1 3 15 20.9 19.3 8
Outsourcing/Imports 6.9 6.6 6.9 6.5 7.4 6 13 27.3 25.1 9
Total 28.0 25.0 26.5 27.1 29.6 6 9 108.1 101.7 6
Tiles NSR (/sq mtr) YoY (%) QoQ (%) YoY (%)
Own Manufacturing 396 391 386 380 377 (5) (1) 383 400 (4)
Subs/JV's 315 385 379 375 369 17 (2) 376 365 3
Outsourcing/Imports 429 383 342 360 352 (18) (2) 359 380 (6)
Blended 387 387 373 374 369 (5) (1) 376 388 (3)
Segment EBIT (%) YoY (bps) QoQ (bps) YoY (bps)
Tiles 12.3 13.8 14.1 13.5 11.6 (72) (186) 13.2 11.2 198
Others (S/w, Faucets, Ply) 6.1 5.8 0.7 1.5 0.9 (513) (56) 2.0 3.1 (101)
Blended 11.8 13.0 12.8 12.1 10.4 (132) (171) 12.1 10.5 157
Unallocated income/(exp) 0.9 0.9 0.7 1.0 1.4 1.0 0.8
Valuation and View

Our positive view on KJC is underpinned by 1) its numero uno position in tiles, 2)
execution capabilities, backed by a strong management, 3) robust free cash flows
(FCF), and 4) focus on market share gains, led by capacity addition and network
expansion. Strong demand from the housing sector, KJC’s branding efforts,
expansion in dealer network and shift in volumes to exports by Morbi players augur
well for KJC’s volumes.
After 4Q, we cut earnings estimates by ~5% on marginal reduction in tiles volume,
realization and margin estimates. We now expect 12%/12%/14%/15% CAGR in tile-
volume/ revenue/EBITDA/PAT over FY24-26E (FY19-24: 6%/9%/9%/13%), with ~28%
RoIC and ~Rs 3.3bn annual FCF. While long-term structural drivers are intact, on soft
near-term outlook and low margin of safety in scrip at ~35x FY26E P/E, we maintain
HOLD rating with an unchanged target price of Rs 1,233 (35x FY26E P/E).
Revenue 52,031 59,069 51,056 57,456 (2) (3) 51,056 57,456 - - 51,219 58,093 0 1
EBITDA 8,283 9,522 7,956 9,125 (4) (4) 7,956 9,125 - - 8,107 9,536 2 5
EBITDA margin (%) 15.9 16.1 15.6 15.9 16 16 15.8 16.4
PAT 5,044 5,940 4,788 5,612 (5) (6) 4,788 5,612 - - 5,046 6,071 5 8
EPS 32 37 30 35 30 35 32 38
75
56
+1 SD 50
38 Mean 40
-1 SD 29
19
0
Feb-21
Jun-19
Dec-19
Nov-23
Jun-24
Jul-20
Oct-22
Aug-21
Mar-22
May-23
Key risks
• Slowdown in economy and construction activities
• High volatility in gas prices
• Competition from Morbi intensifying
FINANCIALS
Growth (%) 33 18 4 12 13 Net worth 21,224 23,268 26,165 28,723 31,786
- Depreciation 1,154 1,329 1,480 1,583 1,724 Net Intangible assets 24 15 10 10 10
Other income 276 336 462 357 431 Goodwill 85 327 327 327 327
Interest Exp 127 223 211 204 207 CWIP 2,634 817 679 579 479
Effective tax rate (%) 25.0 25.1 24.9 25.1 25.1 Investments (Financial) - 19 148 148 148
+ Associates/(Minorities) (58) (18) (113) (100) (100) Current Assets 11,485 13,653 13,047 14,412 16,062
Net Income 3,770 3,445 4,221 4,788 5,612 Cash 4,244 3,938 5,141 6,144 7,383

- Incr./(decr.) in WC 574 1,739 (196) 742 1,151 P/B (x) 9.3 8.5 7.5 6.9 6.2
- Capex 2,634 2,082 2,785 2,400 2,400 ROIC 27.3 21.7 23.7 25.3 27.7
Free cash-flow 1,621 873 3,232 3,164 3,648 DPS (Rs per share) 11.0 9.0 12.0 14.0 16.0
- Dividend 1,273 1,433 1,433 2,230 2,549 Dividend payout (%) 46.5 41.6 45.3 46.6 45.4
+ Equity raised 52 12 11 - - Net debt/equity (x) (0.1) (0.1) (0.1) (0.1) (0.2)
+ Debt raised 281 427 (393) 20 20 Receivables (days) 51 50 49 49 49
- Fin Investments (18) 363 628 - - Inventory (days) 46 47 42 42 42
- Misc. Items (CFI + CFF) 624 (265) (89) (37) (108) Payables (days) 29 26 23 25 25
Net cash-flow 75 (218) 878 991 1,227 CFO:PAT (%) 113 86 143 116 108
11 June 2024
Systematix
Building Materials
Somany Ceramics (BUY, TP: Rs 883)

Healthy 4Q margins and cash flows to sustain
COMPANY UPDATE Somany Ceramics’ (SOMC) 4Q tile volume/revenue grew 7%/5% YoY (broadly in-
Sector: Building Materials Rating: BUY line); EBITDA margin expanded 180bps YoY at 10.8%, despite 248bps YoY dip in
gross margin at 51.7%, aided by lower employee, power & fuel and other expenses.
CMP: Rs 730 Target Price: Rs 883
Demand in 1QFY25 is expected to be soft due to election; strong rebound is
Stock Info expected in 2HFY25 as new housing construction reaches near completion. SOMC
Sensex/Nifty 76,490/23,259 aims 2x growth of the tile industry (5-6%) domestically. After a strong 10.8%
Bloomberg SOMC IN EBITDA margin in 4Q, management has guided for a 10-11% margin in FY25. Low
Equity shares (mn) 41 gas price, increase in GVT mix and better plant utilisation are drivers to aid margin
52-wk High/Low 782/570 uptick. The current WC cycle is likely to sustain and drive strong CFO and FCF (on
Face value Rs 2 low capex need of ~Rs 600mn). After 4Q, we broadly maintained our earnings
M-Cap Rs 30bn/USD 360mn
estimates. We now expect 11%/12%/17%/37% CAGR in tiles-volume/revenue/
EBITDA/PAT over FY24-26E. On healthy EBITDA margin guidance, robust CFO and
Financial Snapshot (Rs mn) ~23% RoIC in FY26E, we maintain BUY rating with an unchanged target price of Rs
Y/E Mar FY24 FY25E FY26E 883 (20x FY26E P/E). Volume recovery and healthy margin are key triggers to
Net sales 25,914 28,844 32,339 support our upgrade. (concall KTAs)
EBITDA 2,532 2,963 3,483
OPM (%) 9.8 10.3 10.8
4Q - tile volume/revenue (up 7%/5% YoY) broadly in-line; EBITDA margin healthy at
PAT (adj.) 969 1,405 1,810 10.8%, up 180bps YoY: Despite 248bps YoY dip in gross margin at 51.7%, EBITDA
EPS (adj.) (Rs) 23.6 34.3 44.1 margin came strong at 10.8%, up 180bps YoY, aided by lower employee, power &
PE (x) 30.5 21.0 16.3 fuel and other expenses. [Mix: Ceramics 35%, PVT 29%, GVT 36%]. Sluggish demand
P/B (x) 4.1 3.5 2.9 continues in domestic markets and exports (freight, war). ASPs declined due to sales
EV/EBITDA (x) 12.9 10.7 8.7 incentive schemes to protect market-share from intense competition. A&P spend
RoE (%) 13.5 16.6 18.0 stood at 2.5% of revenues (expected to be ~3% ahead). CFO at FY24 end stood high
RoCE (%) 14.0 17.6 19.8 at Rs 3.93bn vs. 1.64bn at FY23 end on tight WC and healthy operating results. SOMC
Net-D/E (x) 0.4 0.2 0.1 added 110 net dealers in FY24 and aims 250 addition in FY25.
Shareholding Pattern (%) Aims to grow at 2x of tile industry growth (5-6%): SOMC expects the tile industry to
Mar’24 Dec’23 Sep’23 grow at 5-6% domestically and 2x growth for itself. Demand in 1QFY25 is expected to
Promoter 55.0 54.8 54.8 be soft due to election; strong rebound is expected in 2HFY25 as new housing
- Pledged
construction reaches near completion. After a strong 10.8% EBITDA margin in 4Q,
FII 1.3 1.4 1.5
management has guided for a 10-11% margin in FY25. Low gas price, increase in GVT
DII 23.8 23.3 23.7
Others 19.8 20.5 20.1
mix and better plant utilization are drivers to aid margin uptick. The current WC cycle
is likely to sustain and drive strong CFO and FCF (on low capex need of ~Rs 600mn).
Stock Performance (1-year) GVT (25msm capacity incl 4mn outsourced) mix is expected to inch up to 40% in the
900 next few years from 34% in FY24. Project sales is another growth area; SOMC will
806 focus on projects in bigger towns and retail sales (80% mix) in smaller towns.
713 Large capex over for now; focus on value-added products: Post Rs 1.76bn/1.62bn
capex in FY23/24 on its north and south India plants, SOMC envisages incurring ~Rs
619
600mn in FY25 on routine maintenance. Large capacity addition in the value-added
525 premium segment should enable the company to position itself as a premium tiles
Oct-23
Nov-23
Jan-24
Apr-24
Dec-23
Jul-23
Mar-24
Jun-23
Aug-23
Sep-23
May-24
Feb-24
Jun-24
brand. Large slab plant in Gujarat commenced in Jan’24 (Rs 1.85bn capex, Rs 2.5bn
peak revenue); Nepal plant (Rs 220mn capex) is now expected to start in 2HFY25
SOMC Sensex
post delay due to rains.
Maintain BUY with Rs 883 target price: After 4Q, we broadly maintained our
earnings estimates. We now expect 11%/12%/17%/37% CAGR in tiles-
volume/revenue/ EBITDA/PAT over FY24-26E. On healthy EBITDA margin guidance,
robust CFO and ~23% RoIC in FY26E, we maintain BUY rating with an unchanged
target price of Rs 883 (20x FY26E P/E). Volume recovery and healthy margin are key
triggers to support our upgrade.

• Tiles industry is expected to grow at 5-6% domestically; Somany aims to grow at
2x the rate
• 1QFY25 expected to be soft due to elections; strong rebound expected in 2HFY25
as new housing construction reaches near completion
• FY25 EBITDA margin guidance of 10-11%
• Margin drivers – low gas price, increase in GVT mix, better plant utilisation
• Expect current WC cycle to sustain; CFO to be strong
• GVT (25msm capacity incl 4mn outsourced) mix is expected to inch up to 40% in
next few years from 34% in FY24
• Table-top segment to drive value added demand from 3Q
• Project sales expected to grow at 25%
• Strategy – focus on projects in bigger towns and retail sales in smaller towns
4QFY24 key highlights
• Tiles volume/revenue (up 7%/5% YoY) broadly in-line
• Gross margin down 248bps YoY at 51.7%
• EBITDA margin 10.8%, up 180bps YoY, aided by lower Employee, Power & Fuel
and Other expenses
• Mix: Ceramics 35%, PVT 29%, GVT 36%
• Sluggish demand continues in domestic markets and exports (freight, war)
• ASPs down due to sales incentive schemes
• A&P spend at 2.5% of revenues; expected to go up to 3%
FY24 key highlights
• Mix: Ceramics 37%, PVT 29%, GVT 34%
• CFO at FY24 end stood high at Rs 3.93bn vs. 1.64bn at FY23 end
• Capex: FY23/24 Rs 1.76bn/1.62bn
• Bathware CU: Sanitaryware 70%, Faucetware 100%, Overall 86%/89% in FY24/4Q
• Retail sales mix 80%, govt ~12%, and private institution ~8%
• Added 110 net dealers in FY24; aims 250 addition in FY25
Capex – no major plan
• No major capex planned except for routine (Rs 300-600mn)
• Nepal market has halved to 13msm from 25msm due to rains; to start plant in
2HFY25
• Max plant CU 40-50% - to reach 80% by FY25 end
• Total installed capacity: ~79msm; FY24 sales 68msm
Average gas price fell to Rs 45/scm in FY24 vs. Rs 53 in FY23
• 4QFY24 (Rs /scm): North 45, South 50, Morbi 47
• FY24: North 43, South 52, Morbi Rs 45
Morbi Tiles Industry
• Morbi is currently having surplus capacity
• Morbi (CU <70%) exports dropped putting pressure on domestic market
• Exports from India expected to be strong; US ~8% mix
Exhibit 1: Somany Ceramics - Quarterly performance
Revenue 6,792 5,865 6,552 6,121 7,375 9 20 25,914 24,785 5
Employee costs 805 760 822 794 867 8 9 3,244 3,012 8
Power & fuel 1,543 1,189 1,379 1,252 1,399 (9) 12 5,219 6,471 (19)
Other expenses 723 653 776 757 754 4 (0) 2,940 2,721 8
EBITDA 610 506 641 590 795 30 35 2,532 1,887 34
Depreciation 187 168 176 188 193 3 3 725 679 7
Finance costs 116 112 110 109 134 15 23 465 404 15
Other income 36 24 38 28 16 (55) (43) 106 145 (27)
Exceptional (loss)/gain - (66) - 13 33 (21) (22)
PBT 342 184 394 334 516 51 54 1,428 929 54
Tax 98 58 98 100 177 81 76 434 259 67
PAT after JV/Associate 243 146 293 222 308 27 39 969 715 35
EPS (Rs) 5.9 3.6 7.1 5.4 7.5 27 39 23.6 17.4 35
Gross margin 54.2 53.0 55.2 55.4 51.7 (248) (372) 53.8 56.9 (308)
Employee costs 11.8 13.0 12.5 13.0 11.8 (9) (122) 12.5 12.2 37
Power & fuel 22.7 20.3 21.0 20.5 19.0 (376) (150) 20.1 26.3 (618)
Other expenses 10.7 11.1 11.8 12.4 10.2 (42) (214) 11.3 10.8 57
EBITDA margin 9.0 8.6 9.8 9.6 10.8 180 113 9.8 7.6 216
Depreciation 2.8 2.9 2.7 3.1 2.6 (14) (46) 2.8 2.7 6
Finance costs 1.7 1.9 1.7 1.8 1.8 11 4 1.8 1.6 16
Other income 0.5 0.4 0.6 0.5 0.2 (31) (24) 0.4 0.6 (18)
PBT 5.0 4.3 6.0 5.3 6.6 152 130 5.6 3.8 176
Effective tax rate 28.6 31.7 25.0 30.0 34.3 571 432 30.4 27.9 248
PAT 3.6 2.1 4.5 3.8 4.6 100 77 3.8 2.7 114
Segment revenue YoY (%) QoQ (%) YoY (%)
Own Manufacturing 2,153 2,108 2,089 1,857 2,100 (2) 13 8,154 8,335 (2)
Subs (tiles) 2,212 1,714 1,878 1,887 2,234 1 18 7,713 8,040 (4)
Outsourcing/Imports 1,469 1,253 1,664 1,419 1,780 21 25 6,117 5,108 20
Tiles - Total 5,835 5,075 5,631 5,163 6,115 5 18 21,984 21,483 2
Bathware 742 582 640 653 796 7 22 2,671 2,450 9
Adhesives 107 117 144 153 183 70 20 597 332 80
Tiles - sales volume
YoY (%) QoQ (%) YoY (%)
(msm)
Own Manufacturing 6.6 6.5 6.3 5.8 6.7 1 15 25.3 25.3 0
Subs/JV's 6.4 4.9 5.4 5.6 6.7 5 21 22.6 23.1 (2)
Outsourcing/Imports 4.6 4.0 5.2 4.4 5.5 19 25 19.0 15.5 23
Total tiles volume 17.6 15.4 16.9 15.8 18.9 7 20 67.0 63.9 5
Tile - NSR (Rs/sq mtr) YoY (%) QoQ (%) YoY (%)
Own Manufacturing 326 325 330 320 314 (4) (2) 322 330 (2)
Subs/JV's 347 347 348 340 333 (4) (2) 341 348 (2)
Outsourcing/Imports 318 315 321 323 325 2 1 321 330 (3)
Blended 332 329 333 328 324 (2) (1) 328 336 (2)
Valuation and View

SOMC is India’s leading tiles manufacturer, with ~10% market share in the organized
tile sector in value terms. Its 11 plants that manufacture tiles, sanitaryware and bath
fittings, are spread across India. The company has emerged stronger after
undergoing tough times during FY17-20 (industry and company-level issues), as it
took corrective steps in terms of improving its fundamentals, strengthening operations,
and cleaning up its balance sheet. Notwithstanding near-term weakness in volumes
and margin, we postulate robust medium-to-long-term outlook for SOMC.
We broadly maintain our earnings estimates and expect to clock 11%/12%/17%/37%
CAGR in tiles-volume/revenue/EBITDA/PAT over FY24-26E. On healthy EBITDA
margin guidance, robust CFO and ~23% RoIC in FY26E, we upgrade SOMC scrip to
BUY with a higher target price of Rs 883 (20x FY26E P/E; earlier Rs 672 at 16x).
Volume recovery and healthy margin are key triggers to support our upgrade.
Revenue 28,682 32,183 28,844 32,339 1 0 28,844 32,339 - - 28,387 32,104 (2) (1)
EBITDA 2,873 3,385 2,963 3,483 3 3 2,963 3,483 - - 2,911 3,416 (2) (2)
EBITDA margin (%) 10.0 10.5 10.3 10.8 10 11 10.3 10.6
PAT 1,415 1,783 1,405 1,810 (1) 1 1,405 1,810 - - 1,349 1,730 (4) (4)
EPS 33 42 34 44 34 44 33 42

90
68
45
+1 SD 39
23 Mean 26
-1 SD 13
0
Jun-24
Jun-19
Dec-19
Oct-22
Nov-23
Jul-20
Feb-21
Aug-21
Mar-22
May-23
Key risks: Slowdown in economic and construction activities, high volatility in gas
prices, intensifying competition from Morbi.
FINANCIALS
Growth (%) 27 18 5 11 12 Net worth 7,263 7,870 7,201 8,443 10,048
Direct costs 9,205 10,694 11,979 13,190 14,626 Total debt (incl. Pref) 5,340 5,568 4,014 3,914 3,814
Gross Margin (%) 56.1 56.9 53.8 54.3 54.8 Minority interest 1,076 1,076 1,128 1,138 1,148
Other income 134 145 106 144 194 Goodwill 73 73 73 73 73
Interest Exp 296 404 465 375 356 CWIP 2,267 473 96 (4) (14)
PBT 1,264 929 1,428 1,953 2,513 Investments (Strategic) - - - - -
Effective tax rate (%) 26.1 27.9 30.4 26.0 26.0 Investments (Financial) 600 319 146 1,146 2,146
+ Associates/(Minorities) (47) 46 (25) (40) (50) Current Assets 6,009 7,539 7,598 8,371 9,293
Net Income 887 715 969 1,405 1,810 Cash 1,486 1,546 709 713 898
Adjusted income 887 715 969 1,405 1,810 Current Liabilities 3,881 5,271 7,125 7,492 7,884
WANS 42 42 41 41 41 Working capital 2,128 2,269 472 879 1,409
FDEPS (Rs) 22 17 24 34 44 Capital Deployed 14,002 14,757 12,632 13,764 15,260

OCF before WC 2,106 1,982 2,599 2,870 3,381 EV/sales (x) 1.6 1.4 1.3 1.1 0.9
- Incr./(decr.) in WC 327 90 (1,676) 407 530 P/B (x) 4.1 3.8 4.2 3.5 3.0
- Capex 2,680 1,720 1,570 500 590 ROIC 13.6 10.3 15.2 19.0 22.8
Free cash-flow (1,255) (74) 2,364 1,499 1,651 DPS (Rs per share) - 3.0 3.0 4.0 5.0
Acquisitions Dividend yield (%) - 0.4 0.4 0.5 0.7
- Dividend - 127 127 164 205 Dividend payout (%) - 17.8 12.7 11.7 11.3
+ Equity raised - - (3) - - Net debt/equity (x) 0.4 0.4 0.4 0.2 0.1
+ Debt raised 878 266 (3,017) (100) (100) Receivables (days) 41 40 47 47 47
- Fin Investments (52) (731) (269) 1,000 1,000 Inventory (days) 48 58 49 49 49
- Misc. Items (CFI + CFF) 163 273 355 231 162 Payables (days) 45 56 79 74 69
Net cash-flow (488) 523 (869) 4 185 CFO:PAT (%) 161 230 406 142 124
COMPANY SECTION
WOOD PANEL
11 June 2024
Systematix
Building Materials
Greenpanel Industries (HOLD, TP: Rs 326)

Weakness to prevail in the medium term
COMPANY UPDATE Greenpanel’s (GREENP) 4Q revenue/EBITDA/PAT missed our estimates by 10%/
Sector: Building Materials Rating: HOLD 32%/24% on weakness on all fronts (MDF/plywood volume down 7%/30% YoY,
CMP: Rs 314 Target Price: Rs 326 MDF EBITDA margin down 320bps at 16.4%, plywood EBITDA margin -10.5%). The
company had to resort to volume-based incentive schemes (sustained in 1QFY25)
Stock Info to push MDF volumes. Wood prices went up 30% during FY24 due to lower
Sensex/Nifty 76,490/23,259 availability after reduced plantation during covid. Management expects timber
Bloomberg GREENP IN availability situation to improve not before July’25. After a 4% YoY decline in MDF
Equity shares (mn) 123
volume (domestic up 2%, exports down 24%) in FY24, management expects a 15%
growth in FY25, driven by a 18% rise in domestic volume and a flattish export. MDF
Face value Rs 1
industry capacity stood at 2.9mn cbm at FY24 end while production stood at 2.4mn
3-m Avg turnover USD 1.0mn cbm in FY24. Industry is expected to add 850k cbm capacity in FY25 incl. 230k of
GREENP (commissioning expected in 3QFY25). Plywood volume is aimed to grow
Financial Snapshot (Rs mn) 8% YoY in FY25 after a 28% dip in FY24. After 4Q, we cut earnings estimates by 6-
Y/E Mar FY24 FY25E FY26E 8% on lower volumes and margins estimates. We now expect 13%/26%/29% CAGR
Net sales 15,673 17,114 20,009
in revenue/EBITDA/PAT over FY24-26E (FY19-24: 21%/26%/33%). Longer than
EBITDA 2,465 3,034 3,907
expected recovery in volumes and low RoE/RoCE of ~14%/16% would continue to
OPM (%) 15.7 17.7 19.5
PAT (adj.) 1,428 1,711 2,362 suppress GREENP’s scrip valuation. Maintain HOLD with an unchanged target price
EPS (adj.) (Rs) 11.6 14.0 19.3 of Rs 326 (17x FY26E P/E). (concall KTAs)
PE (x) 25.6 21.4 15.5 4Q - large misses on all fronts: Consol. revenue/EBITDA/PAT missed our estimates by
P/B (x) 2.8 2.5 2.2 10%/32%/24%. Revenue declined 10% YoY mainly due to lower volumes in MDF and
EV/EBITDA (x) 15.4 12.5 9.0 Plywood segments. Gross margin contacted 239bps QoQ; EBITDA margin dipped
RoE (%) 10.8 11.6 14.0 269bps QoQ at 12.9%. Thus, EBITDA/PAT fell 33%/57% YoY. NWC days rose by 11
RoCE (%) 12.1 13.1 16.3
days to 28 days on higher inventory days. Receivable days remained low at 7 days.
Net-D/E (x) 0.1 0.1 (0.1)
MDF/plywood volumes slipped 7%/30% YoY: 4Q MDF volume fell 7% YoY, impacted
Shareholding Pattern (%) by 75% dip in exports while domestic volume grew 23%. GREENP consciously
Mar’24 Dec’23 Sep’23
reduced exports since it was not economical at current wood prices and due to fall in
Promoter 53.1 53.1 53.1
international MDF prices. OEM mix of 27% is likely to be maintained. An 8% QoQ dip
- Pledged
FII 3.0 3.2 4.4
in 4Q realization was due to volume-based scheme (4%) and inferior mix (4%). A
DII 25.9 24.6 22.9 16.4% EBITDA margin (down 530bps YoY and 320bps QoQ) was impacted by lower
Others 18.0 19.1 19.6 domestic realization (due to launch of volume-based schemes and a 30% higher
wood prices during the year). Plywood volume/revenue in 4Q declined 30%/35% YoY
with avg. realization falling 6% YoY (up 1% QoQ). EBITDA margin remained negative
450
(10.5%) due to lower volume and higher RM costs. Postponement of BIS
400 implementation acted as a dampener. Management sees 8% rise in FY25 volume (2Q
350 onward after channel restructuring is over); product price to stay stable in near term.
300 MDF volume likely to grow 15% YoY in FY25 after a 4% dip in FY24: MDF volume in
FY24 declined 4% YoY, led by 24% dip in exports while domestic volume grew a
250
meagre 2%. Management expects volume to grow 15% in FY25, driven by a 18% rise
Oct-23
Jan-24
Apr-24
Jul-23
Dec-23
Mar-24
Nov-23
Jun-23
Aug-23
Sep-23
Feb-24
May-24
Jun-24
in domestic volume and a flattish export. Incentive schemes have sustained in

GREENP Sensex
1QFY25; price hike will not be possible in 1H due to stiff competition and
commissioning of new capacities. MDF industry capacity stood at 2.9mn cbm at FY24
end while production stood at 2.4mn cbm in FY24. Industry is expected to add 850k
cbm capacity in FY25 incl. 230k of GREENP (commissioning expected in 3QFY25). VAP
mix would be stable in FY25 as focus will be to push volumes. Capex in FY25 is
pegged at Rs 5bn. Wood prices went up 30% during FY24 due to lower availability
after reduced plantation during covid. Management expects timber availability
situation to improve not before July’25.

Outlook
• FY24 volume growth (% YoY): MDF down 4% (domestic up 2%, export down
24%); Plywood down 28%
• FY25E volume growth (% YoY): MDF up 15% (domestic up 18%, export flattish);
Plywood up 8%
• Capex: FY25 Rs 5bn; FY26 Rs 500mn
• An additional 35% MDF capacities to commission in 3QFY25
• Wood prices went up 30% during FY24 due to lower availability after reduced
plantation during covid
• Expects timber availability situation to improve not before July’25
• MDF industry capacity stood at 2.9mn cbm at FY24 end while production stood at
2.4mn cbm in FY24
• Expects MDF industry to add 850k cbm capacity in FY25 incl 230k of Greenpanel
MDF
• 4Q Total revenue down 7% YoY
• 4Q Total volume down 7% YoY (domestic up 23%, exports down 75%)
• 4Q OEM volume mix at 27% - will maintain similar mix
• Consciously reduced exports since it was not economical at current wood prices
and due to fall in international MDF prices
• 4Q EBITDA margin 16.4%, down 530bps YoY and 320bps QoQ, due to lower
domestic realization
• Launch of volume-based schemes in 4Q due to increased competition and a 30%
higher wood prices during the year impacted margin
• An 8% QoQ dip in 4Q realization was due to volume-based scheme (4%) and
inferior mix (4%)
• Incentive schemes have sustained in 1Q
• VAP mix is expected to be stable in FY25 as focus will be to push volume
• Won’t be able to increase prices in 1H due to stiff competition and commissioning
of new capacity
Plywood
• 4Q total volume/revenue down 30%/35% YoY
• 4Q Avg realization down 6% YoY and up 1% QoQ
• 4Q EBITDA margin negative 10.5% due to lower volume and higher RM costs
• Postponement of BIS implementation acted as a dampener
• Volumes likely to increase 2Q onward after channel restructuring is over
• Expects stable price in near term
4QFY24 - large misses on all fronts
• Consol revenue/EBITDA/PAT missed our estimates by 10%/32%/24%
• Revenue declined 10% YoY mainly due to lower volumes in MDF and Plywood
• Gross margin 53.8%, down 239bps QoQ
• EBITDA margin 12.9%, down 269bps QoQ
• EBITDA/PAT fell 33%/57% YoY
• NWC days rose by 11 days to 28 days on account of higher inventory days
• Receivable days remain under control at 7 days
Exhibit 1: Greenpanel Industries - Quarterly results
Revenue 4,414 3,862 3,987 3,857 3,966 (10) 3 15,673 17,829 (12)
Raw material costs 2,040 1,612 1,770 1,692 1,834 (10) 8 6,907 7,458 (7)
Employee costs 319 333 354 335 385 21 15 1,406 1,397 1
Other expenses 1,293 1,259 1,173 1,228 1,234 (5) 0 4,894 4,808 2
EBITDA 762 658 691 603 513 (33) (15) 2,465 4,165 (41)
Depreciation 172 182 185 179 182 6 2 729 720 1
Finance costs 32 40 19 62 2 (95) (97) 123 190 (36)
Other income 85 64 68 13 74 (13) 466 219 194 13
Exceptional (loss)/income - - - - - - 61
PBT 643 500 555 374 403 (37) 8 1,832 3,510 (48)
Tax (46) 127 145 28 105 (327) 269 405 944 (57)
PAT after JVs profit/(loss) 689 373 410 346 298 (57) (14) 1,427 2,565 (44)
EPS (Rs) 5.6 3.0 3.3 2.8 2.4 (57) (14) 11.6 20.9 (44)
Gross margin 53.8 58.3 55.6 56.1 53.8 (2) (239) 55.9 58.2 (224)
Employee cost 7.2 8.6 8.9 8.7 9.7 249 103 9.0 7.8 114
Other expenses 29.3 32.6 29.4 31.8 31.1 182 (73) 31.2 27.0 426
EBITDA margin 17.3 17.0 17.3 15.6 12.9 (433) (269) 15.7 23.4 (764)
Depreciation 3.9 4.7 4.6 4.6 4.6 71 (5) 4.7 4.0 61
Finance costs 0.7 1.0 0.5 1.6 0.0 (69) (157) 0.8 1.1 (29)
Other income 1.9 1.6 1.7 0.3 1.9 (7) 153 1.4 1.1 31
PBT margin 14.6 12.9 13.9 9.7 10.2 (442) 45 11.7 19.7 (800)
Effective tax rate (7.2) 25.5 26.1 7.6 26.0 22.1 26.9 (481)
PAT margin 15.6 9.6 10.3 9.0 7.5 (810) (146) 9.1 14.4 (528)
MDF YoY (%) QoQ (%) YoY (%)
Revenue 3,860 3,402 3,545 3,466 3,604 (7) 4 14,017 15,346 (9)
EBITDA margin (%) 21.7 20.4 21.2 19.6 16.4 19.4 27.8
Sales volume (cbm) 1,37,265 1,15,798 1,23,615 1,18,301 1,27,238 (7) 8 4,84,952 5,06,743 (4)
Domestic 94,338 88,368 90,407 96,673 1,16,434 23 20 3,91,882 3,85,069 2
Exports 42,927 27,430 33,208 21,628 10,804 (75) (50) 93,070 1,21,674 (24)
Capacity utilisation (%) 80 74 72 79 78 76 78
Realisation (Rs/cbm) 28,122 29,376 28,679 29,300 28,325 1 (3) 28,904 30,283 (5)
Domestic 32,978 32,925 32,771 31,593 29,058 (12) (8) 31,412 33,432 (6)
Exports 17,450 17,945 17,538 19,053 20,430 17 7 18,345 20,317 (10)
Plywood YoY (%) QoQ (%) YoY (%)
Revenue 546 450 432 384 357 (35) (7) 1,622 2,440 (34)
EBITDA margin (%) 0.4 5.9 1.6 (4.1) (10.5) (1.2) 6.9
Sales volume (mn sqm.) 2.04 1.58 1.64 1.54 1.42 (30) (8) 6.18 8.58 (28)
Capacity utilisation (%) 70 58 50 62 51 55 73
Realisation (Rs/sqm) 267 285 263 249 251 (6) 1 262 284 (8)
Valuation and View

We like GREENP for its market leadership in the fast-growing MDF industry (finding
support from rising acceptance, strong demand revival in housing units and
readymade furniture) and robust financials.
After 4Q, we cut earnings estimates by 6-8% on lower volumes and margins
estimates. We now expect 13%/26%/29% CAGR in revenue/EBITDA/PAT over FY24-
26E (FY19-24: 21%/26%/33%). Longer than expected recovery in volumes and low
RoE/RoCE of ~14%/16% would continue to suppress GREENP’s scrip valuation.
Maintain HOLD with an unchanged target price of Rs 326 (17x FY26E P/E).
Revenue 18,239 21,496 17,114 20,009 (6) (7) 17,114 20,009 - - 17,283 20,796 1 4
EBITDA 3,336 4,232 3,034 3,907 (9) (8) 3,034 3,907 - - 2,737 3,839 (10) (2)
EBITDA margin (%) 18.3 19.7 17.7 19.5 18 20 15.8 18.5
PAT 1,859 2,505 1,711 2,362 (8) (6) 1,711 2,362 - - 1,491 2,223 (13) (6)
EPS 15 20 14 19 14 19 12 18

35
26 +1 SD 27
18 Mean 18
9 -1 SD 9
0
Nov-21
Nov-22
Nov-23
Jun-24
Oct-19
Oct-20
Apr-20
May-21
May-22
May-23
Key risks
• Intensifying competition from rise in imports and huge domestic capacity addition
• Volatility in raw material prices
FINANCIALS
Growth (%) 59 10 (12) 9 17 Net worth 9,516 11,939 13,171 14,698 16,877
SG&A 5,237 6,206 6,300 6,623 7,604 DT Liability/(Asset) 682 1,020 1,010 1,020 1,030
- Depreciation 734 720 729 869 1,009 Net Intangible assets 2 3 2 2 2
Interest Exp 171 190 123 111 110 CWIP - 49 3,127 627 127
Effective tax rate (%) 31.1 26.9 22.1 23.0 23.0 Investments (Financial) - - - - -
Net Income 2,405 2,565 1,428 1,711 2,362 Cash 2,226 3,778 1,404 1,518 3,952
WANS 123 123 123 123 123 Working capital 763 1,490 2,726 2,367 2,481
FDEPS growth (%) 249 7 (44) 20 38 Contingent Liabilities 103 3,764 - - -

+ Non-cash items 734 720 729 869 1,009 EV/EBITDA (x) 9.2 8.9 16.2 13.1 9.5
- Incr./(decr.) in WC (402) 254 662 (364) 109 P/B (x) 4.0 3.2 2.9 2.6 2.3
- Capex 336 803 3,441 2,500 500 ROIC 31.7 30.7 13.9 13.9 17.9
Free cash-flow 3,320 2,571 (2,092) 376 2,582 DPS (Rs per share) 1.5 1.5 1.5 1.5 1.5
- Dividend 184 184 184 184 184 Dividend payout (%) 7.6 7.2 12.9 10.8 7.8
+ Equity raised - - - - - Net debt/equity (x) 0.1 (0.1) 0.1 0.1 (0.1)
+ Debt raised (1,468) (1,002) 1,054 (150) (150) Receivables (days) 9 9 7 12 12
- Fin Investments 1,058 1,795 (1,667) - - Inventory (days) 37 31 47 32 32
Net cash-flow 443 (441) 268 114 2,434 CFO:PAT (%) 152 132 95 168 130
11 June 2024
Systematix
Building Materials
Stylam Industries (BUY, TP: Rs 2,178)

Healthy traction in exports
COMPANY UPDATE Stylam Industries’ (SYIL) consolidated revenue in 4Q came up 1% YoY (up 12% QoQ)
Sector: Building Materials Rating: BUY despite 11% YoY rise in laminate volumes (3mn sheets, up 9% QoQ). EBITDA/PAT
CMP: Rs 1,618 Target Price: Rs 2,178 jumped 18%/40% YoY (up 0%/20% QoQ) on the back of strong gross margin (52%,
up 290bps QoQ). Despite ongoing capex at the greenfield plant, debt free status
Stock Info was maintained. SYIL invested ~Rs 2bn over last 4-5 years on laminate capacity (from
Sensex/Nifty 76,490/23,259 6.4mn to 14.3mn sheets) and new products (acrylic panels, pre-lam MDF boards).
Bloomberg SYIL IN SYIL’s laminate division achieved 74% capacity utilization in FY24. After completion
Equity shares (mn) 16.9 of line balancing and modernisation processes (~Rs 450mn capex), company has
52-wk High/Low 1,908/1452 increased its greenfield capex to Rs 2bn (from Rs 1.5bn earlier) by adding one more
Face value Rs 5
production line to 4 now. Likely operational in 3QFY25, the new facility will have Rs
6bn+ revenue potential (at 3x ATO). Scale up will be fast as ~50% capacity is already
booked from export customers. Focus on value-added SKUs will drive SYIL’s market
Financial Snapshot (Rs mn) positioning. Despite slow ramp up in acrylic solid surface revenue (9MFY24: Rs
Y/E Mar FY24 FY25E FY26E 200mn), SYIL is confident of achieving Rs 3bn+ revenue from the segment over the
Net sales 9,141 11,386 14,213 next 3 years. We maintain our earnings estimates and expect laminate-volume/
EBITDA 1,845 2,219 2,713
revenue/PAT CAGR of 16%/25%/20% over FY24-26E (FY19-24: 8%/15%/27%), with
OPM (%) 20.2 19.5 19.1
strong OCF, and RoCE (33% in FY26E). We remain sanguine on SYIL’s prospects and
PAT 1,284 1,462 1,846
EPS (Rs) 75.8 86.3 108.9 maintain BUY with an unchanged TP of Rs 2,178 (20x FY26E P/E).
PE (x) 20.8 18.3 14.5 4Q - revenue flat YoY at Rs 2.4bn; low ETR drove PAT beat: SYIL’s consol. revenue
P/B (x) 5.0 4.0 3.2 came up 1% YoY (up 12% QoQ) despite 11% YoY rise in laminate volumes at 3mn
EV/EBITDA (x) 14.1 11.6 9.3 sheets (up 9% QoQ). EBITDA/PAT jumped 18%/40% YoY (up 0%/20% QoQ) on the
RoE (%) 24.0 21.9 22.3 back of strong gross margin (52%, up 290bps QoQ). Despite ongoing capex at the
RoCE (%) 33.7 33.1 33.5 greenfield plant, debt free status was maintained.
Net-D/E (x) (0.1) (0.2) (0.2)
Laminate greenfield capex on track to be commissioned in 3QFY25: SYIL invested
Shareholding Pattern (%) ~Rs 2bn over last 4-5 years on laminate capacity (from 6.4mn to 14.3mn sheets) and
Mar’24 Dec’23 Sep’23 new products (acrylic panels, pre-lam MDF boards). SYIL’s laminate division achieved
Promoter 54.6 54.6 54.6
74% capacity utilization in FY24. After completion of line balancing and modernisation
- Pledged
processes (~Rs 450mn capex), company has increased its greenfield capex to Rs 2bn
FII 3.6 3.8 4.0
DII 11.2 12.0 11.6
(from Rs 1.5bn earlier) by adding one more production line to 4 now. Likely operational
Others 30.6 29.6 29.8 in 3QFY25, the new facility will have Rs 6bn+ revenue potential (at 3x ATO). Scale up
will be fast as ~50% capacity is already booked from export customers. Focus on value-
Stock Performance (1-year) added SKUs will drive SYIL’s market positioning.
2,200
Acrylic solid surface sales slowly gaining traction. Despite the slow start (9MFY24:
1,975
Rs 200mn; FY23: ~Rs 250mn), SYIL is confident of achieving Rs 3bn+ revenue from
1,750 the product over the next 3 years. Focus of sales under own Granex brand over OEM
1,525 sales has led to longer time in scale up. Despite low utilisation (<15%), the segment is
1,300
making profits. GoI’s likely imposition of anti-dumping duty on imports from China
will give big boost to domestic manufacturers including STYLAM. C&F agents and a
Oct-23
Jan-24
Jan-24
Dec-23
Jul-23
Jul-23
Jun-23
Nov-23
Nov-23
Aug-23
Sep-23
Sep-23
business head (hired from the industry) are in place to drive this business.
SYIL Sensex
Exhibit 1: Stylam Industries - Quarterly results
Laminate
Volume (mn sheets) 2.7 2.8 3.2 2.8 3.0 11 9 11.8 11.3 4
Revenue break-up
Exports revenue 1,510 1,490 1,510 1,440 1,670 11 16 6,110 6,383 (4)
Domestic revenue 858 767 830 710 729 (15) 3 3,036 3,138 (3)
Revenue mix (%)
Exports 64 66 65 67 70 67 67
Domestic 36 34 35 33 30 33 33
P&L
Revenue 2,368 2,257 2,339 2,146 2,399 1 12 9,141 9,521 (4)
Raw material costs 1,296 1,254 1,245 1,092 1,151 (11) 5 4,741 5,310 (11)
Employee costs 186 186 187 190 188 1 (1) 751 688 9
Other expenses 481 399 435 386 584 21 51 1,804 1,976 (9)
EBITDA 405 418 473 478 477 18 (0) 1,845 1,548 19
Depreciation 44 51 53 56 63 43 14 223 200 11
Finance costs 6 7 6 7 5 (17) (34) 25 82 (69)
Other income 7 5 19 20 13 91 (32) 57 14 297
PBT 362 365 433 435 411 13 (6) 1,643 1,281 28
Tax 95 87 115 122 35 (63) (71) 359 321 12
PAT 268 278 318 313 376 40 20 1,284 960 34
EPS (Rs) 15.8 16.4 18.7 18.5 22.2 40 20 75.8 56.6 34
Gross margin 45.3 44.4 46.8 49.1 52.0 677 290 48.1 44.2 390
Employee costs 7.9 8.2 8.0 8.9 7.8 (3) (105) 8.2 7.2 99
Other expenses 20.3 17.7 18.6 18.0 24.3 404 635 19.7 20.7 (102)
EBITDA margin 17.1 18.5 20.2 22.3 19.9 276 (240) 20.2 16.3 393
Depreciation 1.9 2.3 2.2 2.6 2.6 77 5 2.4 2.1 34
Finance costs 0.2 0.3 0.3 0.3 0.2 (4) (14) 0.3 0.9 (59)
Other income 0.3 0.2 0.8 0.9 0.6 26 (36) 0.6 0.2 47
PBT 15.3 16.2 18.5 20.3 17.1 181 (316) 18.0 13.5 453
Effective tax rate 26.1 23.8 26.6 28.0 8.5 (1,758) (1,947) 21.8 25.1 (322)
PAT 11.3 12.3 13.6 14.6 15.7 435 106 14.1 10.1 397
Valuation and View

SYIL has been recording the fastest revenue and PAT growth among peers since the
last decade. The company has strengthened its balance sheet by steadily retiring
debt and has turned debt free.
We maintain our earnings estimates and expect laminate-volume/ revenue/PAT
CAGR of 16%/25%/20% over FY24-26E (FY19-24: 8%/15%/27%), with strong OCF, and
RoCE (33% in FY26E). We remain sanguine on SYIL’s prospects and maintain BUY with
an unchanged TP of Rs 2,178 (20x FY26E P/E).

Revenue 11,396 14,147 11,386 14,213 (0) 0 11,386 14,213 - - 11,551 13,458 1 (5)
EBITDA 2,321 2,881 2,219 2,713 (4) (6) 2,219 2,713 - - 2,229 2,679 0 (1)
EBITDA margin (%) 20.4 20.4 19.5 19.1 19 19 19.3 19.9
PAT 1,535 1,973 1,462 1,846 (5) (6) 1,462 1,846 - - 1,451 1,821 (1) (1)
EPS 91 116 86 109 86 109 89 110


38
29
+1 SD 21
19
Mean 16
10 -1 SD 10
0
Feb-21
Jun-19
Jun-24
Dec-19
Nov-23
Jul-20
Oct-22
Aug-21
Mar-22
May-23
Key risks
• Global demand slowdown and intensifying competition
• Volatile prices of key raw materials (chemicals, paper) could impact margins
• Highly exposed to currency fluctuations due to export and import activities
related to the sale of finished products and purchase of raw materials.
FINANCIALS
Growth (%) 37 44 (4) 25 25 Net worth 3,161 4,121 5,363 6,672 8,264
Direct costs 3,755 5,310 4,741 6,054 7,628 Total debt (incl. Pref) 651 367 - 10 20
- Depreciation 233 200 223 299 340 Net Intangible assets - 34 33 33 33
Interest Exp 78 82 25 25 26 CWIP - 128 16 16 16
PBT 806 1,281 1,643 1,963 2,478 Investments (Strategic) - - - - -
Effective tax rate (%) 24 25 22 26 26 Investments (Financial) 11 11 - - -
+ Associates/(Minorities) 2 3 3 3 3 Current Assets 3,004 3,256 3,587 4,113 5,022
Net Income 609 960 1,284 1,462 1,846 Cash 87 267 720 1,067 1,674
Adjusted income 609 960 1,284 1,462 1,846 Current Liabilities 969 793 686 940 1,114
FDEPS growth (%) 10 58 34 14 26 Contingent Liabilities 387 416 - - -

EBIT (incl. other income) 769 1,310 1,625 1,833 2,286 P/E (x) 45.0 28.6 21.3 18.8 14.9
Non-cash items 233 200 223 299 340 EV/EBITDA (x) 27.0 17.8 14.5 11.9 9.5
Incr./(decr.) in WC 708 591 270 272 735 P/B (x) 8.7 6.7 5.1 4.1 3.3
Operating cash-flow 102 662 1,171 1,360 1,260 RoCE (%) 25.0 32.0 33.7 33.1 33.5
Capex 137 259 143 1,000 600 ROIC 23.6 33.1 36.1 37.2 38.7
Free cash-flow (35) 403 1,029 360 660 DPS (Rs per share) 2.5 - 2.5 7.5 12.5
Acquisitions Dividend yield (%) 0.2 - 0.2 0.5 0.8
Dividend 42 - 42 153 254 Dividend payout (%) 7.0 - 3.3 8.7 11.5
Equity raised - - - - - Net debt/equity (x) 0.2 0.0 (0.1) (0.2) (0.2)
Debt raised 203 (325) (459) 10 10 Receivables (days) 66 48 65 65 65
Fin Investments 163 (132) 104 - - Inventory (days) 74 61 58 50 50
Misc. Items (CFI + CFF) 27 29 (30) (130) (192) Payables (days) 32 15 16 20 20
Net cash-flow (65) 181 453 347 607 CFO:PAT (%) 17 69 91 93 68
Institutional Equities Team

Nikhil Khandelwal Managing Director +91-22-6704 8001 nikhil@systematixgroup.in
Equity Research
Analysts Industry Sectors Desk-Phone E-mail
Dhananjay Sinha Co Head of Equities & Head of Research - Strategy & Economics +91-22-6704 8095 dhananjaysinha@systematixgroup.in
Abhishek Mathur FMCG +91-22-6704 8059 abhishekmathur@systematixgroup.in
Ashish Poddar Consumer Durables, EMS, Building Materials, Small-Mid Caps +91-22-6704 8039 ashishpoddar@systematixgroup.in
Himanshu Nayyar Consumer Staples & Discretionary +91-22-6704 8079 himanshunayyar@systematixgroup.in
Manjith Nair Banking, Insurance +91-22-6704 8065 manjithnair@systematixgroup.in
Pradeep Agrawal NBFCs & Diversified Financials +91-22-6704 8024 pradeepagrawal@systematixgroup.in
Pratik Tholiya Specialty & Agro Chem, Fertilisers, Sugar, Textiles and Select Midcaps +91-22-6704 8028 pratiktholiya@systematixgroup.in
Sameer Pardikar IT & ITES +91-22-6704 8041 sameerpardikar@systematixgroup.in
Santosh Yellapu Capital Goods +91-22-6704 8094 santoshyellapu@systematixgroup.in
Shweta Dikshit Metals & Mining +91-22-6704 8042 shwetadikshit@systematixgroup.in
Sudeep Anand Oil & Gas, Logistics, Cement, Wagons +91-22-6704 8085 sudeepanand@systematixgroup.in
Vishal Manchanda Pharmaceuticals and Healthcare +91-22-6704 8064 vishalmanchanda@systematixgroup.in
Chetan Mahadik Consumer Staples & Discretionary +91-22-6704 8091 chetanmahadik@systematixgroup.in
Deeksha Bhardwaj Strategy & Economics +91-22-6704 8017 deekshabhardwaj@systematixgroup.in
Devanshi Kamdar IT & ITES +91-22-6704 8098 devanshikamdar@systematixgroup.in
Hinal Kothari Metals & Mining +91-22-6704 8076 hinalkothari@systematixgroup.in
Jennisa Popat Oil & Gas, Logistics, Cement, Wagons +91-22-6704 8066 jennisapopat@systematixgroup.in
Kalash Jain Midcaps +91-22-6704 8038 kalashjain@systematixgroup.in
Krisha Zaveri Consumer Durables, EMS, Building Materials, Small-Mid Caps +91-22-6704 8023 krishazaveri@systematixgroup.in
Mahek Shah Consumer Durables, EMS, Building Materials, Small-Mid Caps +91-22-6704 8040 mahekshah@systematixgroup.in
Nirali Chheda Banking, Insurance +91-22-6704 8019 niralichheda@systematixgroup.in
Pashmi Chheda Banking, Insurance +91-22-6704 8063 pashmichheda@systematixgroup.in
Pravin Mule NBFCs & Diversified Financials +91-22-6704 8034 pravinmule@systematixgroup.in
Prathmesh Kamath Oil & Gas, Logistics, Cement, Wagons +91-22-6704 8022 prathmeshkamath@systematixgroup.in
Purvi Mundhra Macro-Strategy +91-22-6704 8078 purvimundhra@systematixgroup.in
Rajesh Mudaliar Consumer Staples & Discretionary +91-22-6704 8084 rajeshmudaliar@systematixgroup.in
Ronak Dhruv NBFCs & Diversified Financials +91-22-6704 8045 ronakdhruv@systematixgroup.in
Rushank Mody Pharmaceuticals and Healthcare +91-22-6704 8046 rushankmody@systematixgroup.in
Swati Saboo Midcaps +91-22-6704 8043 swatisaboo@systematixgroup.in
Vivek Mane Pharmaceuticals and Healthcare +91-22-6704 8046 vivekmane@systematixgroup.in
Yogeeta Rathod Midcaps +91-22-6704 8081 yogeetarathod@systematixgroup.in
Equity Sales & Trading
Name Desk-Phone E-mail
Vipul Sanghvi Co Head of Equities & Head of Sales +91-22-6704 8062 vipulsanghvi@systematixgroup.in
Jignesh Desai Sales +91-22-6704 8068 jigneshdesai@systematixgroup.in
Sidharth Agrawal Sales +91-22-6704 8090 sidharthagrawal@systematixgroup.in
Shreya Chaudhary Sales +91-22-6704 8033 shreyachaudhary@systematixgroup.in
Rahul Khandelwal Sales +91-22-6704 8003 rahul@systematixgroup.in
Chintan Shah Sales +91-22-6704 8061 chintanshah@systematixgroup.in
Pawan Sharma Director and Head - Sales Trading +91-22-6704 8067 pawansharma@systematixgroup.in
Mukesh Chaturvedi Vice President and Co Head - Sales Trading +91-22-6704 8074 mukeshchaturvedi@systematixgroup.in
Vinod Bhuwad Sales Trading +91-22-6704 8051 vinodbhuwad@systematixgroup.in
Rashmi Solanki Sales Trading +91-22-6704 8097 rashmisolanki@systematixgroup.in
Karan Damani Sales Trading +91-22-6704 8053 karandamani@systematixgroup.in
Vipul Chheda Dealer +91-22-6704 8087 vipulchheda@systematixgroup.in
Paras Shah Dealer +91-22-6704 8047 parasshah@systematixgroup.in
Rahul Singh Dealer +91-22-6704 8054 rahulsingh@systematixgroup.in
Niraj Singh Dealer +91-22-6704 8096 nirajsingh@systematixgroup.in
Corporate Access
Mrunal Pawar Vice President & Head Corporate Access +91-22-6704 8088 mrunalpawar@systematixgroup.in
Darsha Hiwrale Associate Corporate Access +91-22-6704 8083 darshahiwrale@systematixgroup.in
Production
Madhu Narayanan Editor +91-22-6704 8071 madhunarayanan@systematixgroup.in
Mrunali Pagdhare Production +91-22-6704 8057 mrunalip@systematixgroup.in
Vijayendra Achrekar Production +91-22-6704 8089 vijayendraachrekar@systematixgroup.in
Operations
Sachin Malusare Vice President +91-22-6704 8055 sachinmalusare@systematixgroup.in
Jignesh Mistry Manager +91-22-6704 8049 jigneshmistry@systematixgroup.in
Hiren Patel Assistant Manager +91-22-6704 8056 hirenpatel@systematixgroup.in
DISCLOSURES/APPENDIX
I. ANALYST CERTIFICATION
I, Ashish Poddar, Mahek Shah, hereby certify that (1) views expressed in this research report accurately reflect my/our personal views about any or all of the subject securities or issuers
referred to in this research report, (2) no part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this research
report by Systematix Shares and Stocks (India) Limited (SSSIL) or its group/associate companies, (3) reasonable care is taken to achieve and maintain independence and objectivity in
making any recommendations.
Disclosure of Interest Statement Update

Analyst holding in the stock No
Served as an officer, director or employee No
II. ISSUER SPECIFIC REGULATORY DISCLOSURES, unless specifically mentioned in point no. 9 below:
1. The research analyst(s), SSSIL, associates or relatives do not have any financial interest in the company(ies) covered in this report.
2. The research analyst(s), SSSIL, associates or relatives collectively do not hold more than 1% of the securities of the company(ies) covered in this report as of the end of the
month immediately preceding the distribution of the research report.
3. The research analyst(s), SSSIL, associates or relatives did not have any other material conflict of interest at the time of publication of this research report.
4. The research analyst, SSSIL and its associates have not received compensation for investment banking or merchant banking or brokerage services or any other products or
services from the company(ies) covered in this report in the past twelve months.
5. The research analyst, SSSIL or its associates have not managed or co-managed a private or public offering of securities for the company(ies) covered in this report in the previous
twelve months.
6. SSSIL or its associates have not received compensation or other benefits from the company(ies) covered in this report or from any third party in connection with this research
report.
7. The research analyst has not served as an officer, director or employee of the company(ies) covered in this research report.
8. The research analyst and SSSIL have not been engaged in market making activity for the company(ies) covered in this research report.
9. Details of SSSIL, research analyst and its associates pertaining to the companies covered in this research report:
Sr. Yes /
Particulars
No. No.
1 Whether compensation was received from the company(ies) covered in the research report in the past 12 months for investment banking transaction by SSSIL. No
2 Whether research analyst, SSSIL or its associates and relatives collectively hold more than 1% of the company(ies) covered in the research report. No
3 Whether compensation has been received by SSSIL or its associates from the company(ies) covered in the research report. No
Whether SSSIL or its affiliates have managed or co-managed a private or public offering of securities for the company(ies) covered in the research report in the
4 No
previous twelve months.
Whether research analyst, SSSIL or associates have received compensation for investment banking or merchant banking or brokerage services or any other
5 No
products or services from the company(ies) covered in the research report in the last twelve months.
10. There is no material disciplinary action taken by any regulatory authority that impacts the equity research analysis activities.
STOCK RATINGS
BUY (B): The stock's total return is expected to exceed 15% over the next 12 months.
HOLD (H): The stock's total return is expected to be within -15% to +15% over the next 12 months.
SELL (S): The stock's total return is expected to give negative returns of more than 15% over the next 12 months.
NOT RATED (NR): The analyst has no recommendation on the stock under review.
INDUSTRY VIEWS
ATTRACTIVE (AT): Fundamentals/valuations of the sector are expected to be attractive over the next 12-18 months.
NEUTRAL (NL): Fundamentals/valuations of the sector are expected to neither improve nor deteriorate over the next 12-18 months.
CAUTIOUS (CS): Fundamentals/valuations of the sector are expected to deteriorate over the next 12-18 months.
III. DISCLAIMER
The information and opinions contained herein have been compiled or arrived at based on the information obtained in good faith from sources believed to be reliable. Such information
has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy completeness or correctness.
This document is for information purposes only. This report is based on information that we consider reliable; we do not represent that it is accurate or complete and one should exercise
due caution while acting on it. Description of any company(ies) or its/their securities mentioned herein are not complete and this document is not and should not be construed as an
offer or solicitation of an offer to buy or sell any securities or other financial instruments. Past performance is not a guide for future performance, future returns are not guaranteed and
a loss of original capital may occur. All opinions, projections and estimates constitute the judgment of the author as on the date of the report and these, plus any other information
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compensation of the analyst who prepared this document is determined exclusively by SSSIL; however, compensation may relate to the revenues of the Systematix Group as a whole, of
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Systematix

Building Materials 11 June 2024

Strong pipes volume to sustain; tiles, woodpanel eyeing revival in 2H

Tiles & Bathware

Exhibit 1: Valuation Table – 1

Exhibit 2: Valuation Table – 2

Revenue 54,317 50,431 56,458 62,619 56,447 54,607 56,792 68,641 10 21

Revenue 2,189 2,070 2,367 2,519 2,603 2,495 2,216 2,556 1 15

EBITDA 200 25 161 294 262 241 201 254 (14) 26

PAT 88 (48) 49 150 139 129 91 67 (55) (26)

EBITDA /kg 14 2 9 16 12 12 11 12 (21) 16

Revenue 12,129 11,716 12,678 15,062 12,831 13,630 13,702 16,251 8 19

EBITDA /kg 36 28 31 47 34 34 31 37 (20) 20

Bathware revenue - - 100 125 139 140 140 242 94 73

EBITDA - - (130) (35) (34) (41) (40) (65) 86 63

EBITDA margin (%) 13.8 14.1 13.4 14.4 13 14 13.1 13.7

EBITDA margin (%) 15.4 15.6 15.5 15.7 15 16 0.0 0.0

PAT 12,314 14,882 12,910 15,441 5 4 12,910 15,441 - - 13,194 15,512 2 0

EPS 97 117 102 122 102 122 103 122

EBITDA margin (%) 20.8 20.8 19.8 20.0 20 20 19.4 19.8

EBITDA margin (%) 16.2 16.1 15.9 15.9 16 16 16.2 16.4

EPS 196 220 196 220 196 220 203 234

EBITDA margin (%) 15.9 16.1 15.6 15.9 16 16 15.8 16.4

EBITDA margin (%) 10.0 10.5 10.3 10.8 10 11 10.3 10.6

EBITDA margin (%) 14.6 15.3 13.9 14.9 14 15 13.6 14.9

EBITDA margin (%) 12.9 13.8 13.4 14.9 13 15 13.2 13.9

EBITDA margin (%) 18.3 19.7 17.7 19.5 18 20 15.8 18.5

EBITDA margin (%) 10.5 11.4 10.6 11.5 11 11 10.6 11.7

EBITDA margin (%) 20.4 20.4 19.5 19.1 19 19 19.3 19.9

EPS 91 116 86 109 86 109 89 110

FY17 5.6 FY17 10.3

FY18 7.8 FY18 11.2

FY19 75 FY19 7.9 FY19 14.9

FY20 100 FY20 6.9 FY20 14.8

FY21 121 FY21 3.9 FY21 15.8

Exhibit 9: India’s tiles exports – annual trend

Exhibit 5: India’s MDF exports – annual trend

Exhibit 7: India's MDF imports – annual trend

FY22 127 FY22 4.3 FY22 4,035 FY22 20.3

FY23 160 FY23 7.2 FY23 4,817 FY23 23.0

FY24 202 FY24 10.2 FY24 4,933 FY24 25.6

Nov-23 872 Nov-23 422 Nov-23 1,901

Exhibit 10: India’s tiles exports – monthly trend

Systematix Shares and Stocks (India) Limited

Commodity prices, currency movement

Polyvinyl Chloride (PVC) price Polypropylene (PP) price

Source: Reliance Source: Reliance

Exhibit 13: PVC - EDC spread Exhibit 14: USD-INR rate

Exhibit 15: Morbi gas price trend

Source: Gujarat Gas, media reports

P/E Mean +1 SD -1 SD P/E Mean +1 SD -1 SD

P/E Mean +1 SD -1 SD P/E Mean +1 SD -1 SD

P/E Mean +1 SD -1 SD P/E Mean +1 SD -1 SD

FY20 FY21 FY22 FY23 FY24 FY25E FY26E

FY20 FY21 FY22 FY23 FY24 FY25E FY26E

Apollo Pipes (HOLD, TP: Rs 691)

Concall key takeaways (4QFY24)

Kisan Moulding acquisition

Valuation and View

Exhibit 3: P/E band – 1-year-forward and standard deviation

Cash Flow Ratios @ Rs 660

Source: Company, Systematix Institutional Research

Astral (HOLD, TP: Rs 2,017)