Carysil Limited (CARYSIL.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the Carysil Limited Q2 and H1 FY '26 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Chirag Parekh, Chairman and Managing Director. Thank you, and over to you, sir.

Thank you, Anushka. Good evening, ladies and gentlemen. Thank you for joining us for the Carysil Limited Quarter 2 H1 FY '26 Earnings Conference Call. I trust you had the opportunity to review our financial results and investor presentation, both available on company's website and on stock exchanges. Joining me on this call, we have Mr. Anand Sharma, Executive Director and Group CFO; and SGA, Investor Relations Advisers. Global and Indian economy. The global economy is undergoing volatility due to ongoing tariff war. Countries working tirelessly to strike best bilateral trade deal to increase mutual trade. The world economic order is undergoing an exciting transformation, which is creating tremendous opportunities for companies like us. Across mature markets like Europe, North America and fast-growing regions like in the Middle East, Southeast and Africa, we are witnessing a structural shift towards premium design-oriented and durable kitchen solutions. Consumers are increasingly looking for aesthetics and functionality in their kitchen, which meet their life, which are not just practical but also visually appealing. In India, the momentum is equally strong due to urbanization, the rise of nuclear families, rising incomes, a booming housing sector and growing lifestyle aspirations are driving the shift towards premiumization and rapid adoption of modular kitchens. We find ourselves in the intersection of these trends, combining advanced materials, elegant design, global quality standard and strength of Indian manufacturing excellence. Carysil operates in a true sweet spot where premium home products, global expansions and scale manufacturing meets innovation with design. Business performance and growth highlights. We are very pleased with our performance, especially in this time where our major export market, the U.S., has been impacted by a 50% tariff. We have taken steps to meet with this challenge and support our customer in this difficult time. While we are confident India and U.S. will strike mutual beneficial trade deals, we have taken required measures to navigate the current situation effectively. Let me begin with our Quartz Sinks segment, which continues to be the strong growth engine for the company. We have secured the RFQ to supply approximately 70% of the global IKEA non-U.S. business of quartz sinks. The required molds and machinery have been installed, and supplies have commenced as per schedule. In quarter 2 FY '26, volumes reached 197,000 units, going up to 159,000 units in Q2 FY '25, marking the fifth consecutive quarter of volume growth. Key drivers behind this performance include: improved capacity utilization now trending to 88% utilization in quarter 2 FY '26 and 82% in H1 FY '26, indicating better throughput and operating leverage; strong order inflows from global customers; tighter process control, enhanced supply chain coordination, ensuring faster order shipment cycle. Our strategic partnership with big box retail chains and big brand continues to scale up. Given the strong demand visibility, we are immediately adding capacity of 100,000 units of quartz sink with our current existing facility with a small CapEx of INR 5 crores. This expansion is expected to operational by December -- end of December this, '25. In parallel, new molds and product enhancements are underway to cater to evolved global design trends. This initiative will allow us to achieve higher throughput, improved margins and a more diversified product mix. While raw material freight costs have remained largely stable, our focus on efficiency and process optimization continues, ensuring that profitability remains resilient even in a volatile market environment. Our Stainless Steel Sink division continues to build on its strong foundation. Our Stainless Steel Sink volume increased from 40,300 units in Q2 FY '25 to 43,400 units in Q2 FY '26, representing a small growth of 7.6% Y-o-Y growth, supported by healthy domestic demand and export market, including the OEM business of big brands, which will pave way to global tie-up and take this partnership to the next level. With utilization levels at around 95% in quarter 2 H1 FY '26, we've started a third shift production to meet the growing demand of our customers. As informed earlier, we are in process of expanding stainless steel sink manufacturing unit by immediate basis of 70,000 units a year, which will take our capacity to 250,000 units by end of quarter 4 FY '26. Looking at the global demand and interest from major export and Indian OEM customers, we have acquired 7,400 square meter approximate land adjacent to our existing facility with an investment of INR 6 crores, which will support creating additional capacity of strengthening our manufacturing ecosystem and provide headroom for fast future growth. The approximate capacity expansion, we're looking at approximately 150,000 units a year in FY '26 -- FY '26, '27. Appliances division, building the future. Our Appliances continues to demonstrate robust growth momentum. in the domestic market where we are witnessing a structural shift towards premium built-in appliances. Quarter 2 FY '26, we have healthy Y-o-Y growth of 25.5% and 30.5% both of value from volume and revenue terms, driving by rising adoption of built-in hobs, hoods, ovens among modern Indian households. To strengthen our market position in this segment, we are further investing INR 25 crores to set up a modern state of manufacturing and assembly facility, including in-house glass processing plant. The addition of a glass processing is a game changer to its critical step. We have gained control over quality, aesthetic, durability, especially for hobs and hoods with glass finish a defining role. We will also be adding a colored coating line to give matching colors to our sink, which will make us very unique in the market. which will enable us to produce high-quality products at competitive cost. We have keen interest in the big brands, OEM tie-up in the segment, which will provide an opportunity to expand our reach not only in domestic, but also in the global markets. With this, we have aggregate in-house manufacturing capacity of 150,000 units per year and expect it to operational by quarter 2 FY '27. Now coming to Faucet division. The Faucet division continues to perform well with capacity utilization now reaching 75% against installed capacity of 50,000 units per annum. That is 37,500 units. At present, we are primarily manufacturing faucets for domestic market. However, we are getting active interest for global brands and in the India OEM supply, which is expected to further enhance utilization level. We have active inquiry for export market, and we are planning -- activated full installed capacity of 100,000 units per annum in the next coming financial year. Additionally, we are also commencing new assembly of bathroom faucets in addition to the kitchen faucets, primarily focused on the domestic market. However, we can add OEM customer also for global supply. Online, e-com, we have hired new team to focus, expand our online presence of the company. We are excited with the road map and the plans we have made. We are adding new product lines, strengthening digital presence to tap the opportunity lying ahead. India business plan. We are currently in the process of preparing our vision documents for growing India business to INR 500 crores and which will be unveiling in the coming months. We are in the process of onboarding new leadership team for supporting vision of INR 500 crores Indian businesses and creating talent pool in sales and marketing. To support this growth plan, we are onboarding a new leadership team with a strong sales, marketing and service pool. We have recently appointed Vice President, Sales Bathroom division to accelerate our B2B penetration and enhance brand visibility. At the same time, we are strengthening ecosystem by adding new distribution dealers, showrooms and experience centers. We are also in process of opening experience center in Delhi and Hyderabad to cater growing markets in NCR and Telangana, Andhra Pradesh. Additionally, we are receiving great interest from global brands for OEM supply and therefore, expected to increase our India business significantly. Overseas subsidiaries strengthening global footprint. Our overseas subsidiaries continue to deliver resilient performance in spite of volatile situation, reinforcing our global positioning and customer reach. Each subsidiary plays a critical role in the market access, customer proximity and brand visibility. U.K. subsidiary doing consistent performance, while our UAE subsidiary very well, exceeding budgeted sales in the H1 FY '26. We are in process of opening showrooms in Sharjah, Oman in this quarter. We have great scope to expand GCC region for our brands, starting -- getting traction. I'm particularly encouraged with the progress of our U.S. subsidiary, which has turned into positive PAT in Q2 FY '26, which we expect it to continue. Before we move to the Q&A session, I would like to pause and reflect on how far we have come and how exciting the role ahead truly is. Carysil today stands as a global trusted brand in premium kitchen solutions built on design and innovation, world-class manufacturing excellence. The biggest global brands in the kitchen segment are keen to tie up with our manufacturing. This is a testament of our quality, our capacity, our cost to -- ability to serve global demand consistently. Our quartz and stainless steels sinks remain the backbone of the growth engine where appliances and faucets is a powerful growth engine moving forward. Internationally, our subsidiaries continue to build scale, profit and presence in the markets. We have delivered some strong performance, advanced capacity expansion plan and strengthened the customer partnership while maintaining operational discipline. Yet we understand that our success is not defined by numbers. Our success is built on people and values of accountability, innovation and ownership. It is this culture that allows us to look ahead and confidence to dream bigger, execute it sharper and deliver better. I'm extremely optimistic about what lies ahead of Carysil. The foundations are strong, the opportunities are immense, and our strategy is clear. With this, I hand over the call to Mr. Anand Sharma, our Executive Director and CFO -- Group CFO. Thank you.

Thank you, sir. Good evening, everyone. I'm pleased to present historical high performance of the company in this critical juncture of tariff issue and trade tension. Let me take you through the company consolidated financial performance, quarter 2 FY '26 performance. Consolidated total income stood at INR 244 crores in Q2 FY '26 as compared to INR 207 crores of Q2 FY '25. It grew by 17.9% Y-on-Y basis and 7.4% on Q-on-Q basis. EBITDA for quarter 2 FY '26 stood at INR 49.5 crores as compared to INR 37.1 crores of Q2 FY '25 grew by 33.5% Y-on-Y and 12.1% Q-on-Q. EBITDA margins for Q2 FY '26 stood at 20.3%, which is even higher than the upper band of our guidance. Profit after tax and minority interest stood at INR 27.2 crores in quarter 2 FY '26 from INR 16.8 crores of Q2 FY '25. It grew by 61.9% Y-on-Y and 19.1% Q-on-Q basis. Coming to H1 FY '26 performance. Sales volume of Quartz Sink stood at 3.87 lakh units as compared to stainless steel -- sorry, and Stainless Steel Sink stood at 85.9 thousand units. Kitchen Appliances & Others stood at 40.9 units (sic) [ 40.9 thousand units ] in H1 FY '26. Consolidated total income stood at INR 471.3 crores for H1 FY '26 as compared to INR 409.2 crores in H1 FY '25. It grew by 15.2% Y-on-Y basis. EBITDA of the company for H1 FY '26 stood at INR 93.6 crores as compared to INR 74.1 crores in H1 FY '26 growth of 26.3%. EBITDA margin for H1 FY '26 stood at 19.9%. Profit after tax and minority interest stood at INR 50 crores in H1 FY '26 as compared to INR 32.7 crores in H1 '25, growth of 53.2%. Gross debt stood at INR 230.9 crores as on 30th September 2025. Cash and bank balance stood at INR 42.3 crores. The total CapEx for H1 FY '26 stood at INR 34.2 crores, which includes primary machinery, building, molds and other equipments. Thank you. Now I open the floor for question and answer. Over to you, operator.

[Operator Instructions] We take the first question from the line of Vaidik Bafna from Monarch Networth Capital Limited.

Congratulations sir on good set of numbers. Sir, my first question is related to the Quartz Sinks division. Sir, can you quantify us the kind of order book left to be delivered in the H2 for Karran?

Yes. So, you're talking about the pending order, which we're not able to supply? I think -- yes, so I think it is about 10% of the total [ present ] value. It could be about, say, 10,000 pieces approximately because we are suffering from the mold capacity. So just 2 weeks back, we ordered 3 new additional mold for Lowe's. The Lowe's business is unexpectedly gaining a lot of traction than we thought. The things are doing really, really well. We had a visit of the Lowe's team at our factory last week by the senior American team. They're very, very pleased with our performance. We also got a joint Supplier of the Year award from Lowe's in the first year itself, which has never happened to any supplier. They are very bullish on it. We are constantly expanding in terms of volume with Lowe's. So, we have to invest in a lot of new models. So, the capacity bottleneck, yes, was there of the molds in quarter 2.

Sir, I want to know as to how much would our order book be for Karran and how much have we delivered to them in H1 and how much is pending for H2?

Yes. So, we would -- yes, so I would not be able to tell you the exact actual numbers now, but my office will be happy to later on share with you. You just put an e-mail to us. Yes?

Sure, sir. And sir, second question is on the...

Sorry to interrupt Mr. Vaidik, I would request you to join back the queue as there are several participants waiting for their turn. We take the next question from the line of Pritesh from Lucky Investments.

Sir, just 1 question. On the Surfaces side of the business, which is going at about 5%, any light that you want to share? And I fully appreciate the fact that at least 70% of your piece, which is the manufacturing unit piece, which quartz sink, steel sink and kitchen is where you have your expansion lined up and higher growth also lined up. So, congratulations on that part. But on the Surfaces part, any comment that you want to share, how should we look at this piece?

Yes. So, I can tell you on the Surfaces, we are mostly doing -- Pritesh bhai, anyway good to, first of all, hear from you. Surfaces is approximately, I think, about 10% to 15% of our business right now. We are doing only softer surfaces as of now. I am flying down to U.K. next week as we are planning to diversify into harder surfaces. So, the potential of the harder surfaces is much more higher. So globally, the market share -- there's a lot of background disturbance, I don't know. So, the potential of the hard surfaces is there because globally the hard surfaces has 90% market share where the softer has only 10%. So, our growth driver in U.K. for the Surfaces is going to be now on the harder surfaces. We are planning -- my team and they're planning to double the revenue of the hard surfaces within the next 3 to 5 years by introducing hard surfaces. The hard surfaces are quartz, marble and stones.

Okay. So, what you have today is soft surfaces and what will come into picture is hard surfaces, right?

Correct. Right now, of approximately INR 150 crores revenue annual is all soft surfaces.

Okay. So, basically, this 5% growth rate that we're seeing, we'll see this growth rate also accelerating and it's just that this piece is 30% of your business. What I see from your presentation, it's about 25% of your piece. So, it's a work horse of your revenue [indiscernible].

Pritesh bhai, Surfaces include U.K. and U.S. both. Both putting together -- sir was talking only about the U.K. business. So, U.K. business, we are doing only soft surfaces. We are going to add line for hard surface as well because the market for hard surface is also very good. So, to grow that business, we are going to add hard surfaces in U.K. While U.S. is doing good, you can see the results, they have grown on the volume side also and they turned profitable also. Overall, the ratio what is maintained is for the surfaces as a whole business, U.K. and U.S. together.

And just one more question. There was this aspiration to add another 2.5 lakh stainless steel capacity. So where are we on that? Do we have any clearer picture now?

Yes. So, we are, right now, already adding 70,000 units extra by March FY '26. And we -- as I said, we are planning to add another 150,000 at least in FY '26.

No, but that you mentioned for quartz, I was asking for...

No, for stainless steel sinks. No, for stainless steel -- for stainless steel I mentioned.

[Operator Instructions] We take the next question from the line of Akshay from AK Investment.

First of all, congratulations on the great set of Q2 numbers. My first question is, what is our top line growth expectation in half 2 FY '26? And what are the sustainable revenue growth rate over the 3 to 4 years going forward? And what are the kind of margins can we assume going forward? Can we sustain the 19% to 20% EBITDA margin from hereon due to the tariffs and all the things?

Yes. So, answering your first question, I think we are growing at a good rate. We are almost growing at INR 1,000 crore annual growth rate right now. We still maintain our growth guidance of 15% on an annual basis for the next 3 to 4 years. And we still maintain our margin guidance between 18% to 20% of EBITDA, even with the tariff.

Okay, sir. And sir, my second question is, what is our current capacity in the quartz and stainless steel sinks? And do we have any plan for further capacity expansion in our -- the land that we have acquired earlier?

So, right now, the quartz capacity, we are almost going full. We reached -- we peaked on 95% in the last month. Now we are adding 100,000 units at immediate basis by improving our productivity and some expansion in machinery. The potential of the quartz business still remains high. We're still awaiting the sorting out the tariff situation. And the moment I think the tariff situation is solved; I think we see another opportunity of expanding further in the quartz sinks. On the stainless-steel sink side, as we said, the story is exciting because the large box retailers and the OEM businesses have found so much confidence within Carysil, not just as a technology; yes, we do great things, but as a company that we as a company is reliable as a partner, reliable in terms of quality and cost. So -- and they are very happy to see the way how the stainless-steel manufacturing is evolving. So they all want to -- they all kind of coincide with our idea of having a one-stop solution for the granite and stainless steel sinks. I think we can probably look for some great opportunity moving on, on the stainless-steel sink side, adding 70,000 now, 150,000-odd steel sinks for the next year. So, I think there is a great upside awaiting for us on the stainless steel, not the conventional commodity sinks, I want to stress here, it's more on high value-added sinks, which are handmade. We -- all the key players of the world are now reviewing a China plus strategy. They're all moving from China to India. And there are very few manufacturers in India or probably us who can deliver some great quality products for stainless steel sinks.

Yes sir. But I just wanted to know what is total capacity in quartz and stainless steel and how much we are increasing there currently?

We are doing quartz 1 million sinks expanding to 1.1 million sinks. And on the stainless-steel side, we are growing at 250,000 units.

From 180, 000, we going to 250,000.

250,000, yes. So, by 250,000 in March and 150,000 next year, so would be about 400,000 units.

We take the next question from the line of Naithik from [ NF Alpha Fund ].

Congratulations on a great set of numbers. sir my question is on quartz sink side. Just wanted to know, we saw very good growth in terms of volumes in quartz sinks, but we have seen closer to 3%, 4% degrowth in realization. So just wanted to understand the reason for this? And what sort of realizations do we expect in quartz sink going forward? Will it be similar to current quarter levels or will we see some increase?

So, I would just give it to my CFO, but we still -- like I said, we still maintain our margin guidance range of 18% to 20%. Over to you, Mr. CFO.

Yes. So, on the quartz sink side, if you go by the per piece realization, it has not gone down much only because of the product mix and geographical mix what we are selling to other continent and there are some effect of the discount which is given to U.S. So that are all we have, nothing fundamentally changed on the margin side. All margins are intact. And this is only -- I mean, change in the sales mix, nothing much.

Got it. So product mix changes affecting -- has affected Okay. Got it. And my second question, sorry, I actually missed the expansion plan you mentioned for quartz sink. I mean what sort of expansion are we looking for, given that we are [ optimistic ] for 90% utilization. I know 1 lakh units we are adding this year immediately itself. But beyond that, what sort of plans do we have to expand in quartz sink?

Yes. So, when you are going at a 95% capacity, you obviously need at least 10% to 15% idle capacity to try to cater all the -- any rush orders. You see the way that -- the way the things are going here. For example, the Lowe's business is really flying for us, which is unexpectedly more than what we expected. So, they had come here last week and they've given us some more projections it could go more. So, we're trying to build capacity. There too is the IKEA, the global 70% of their global business, which is coming to us, which is again non-U.S. business. There is a big upside can be there in -- from the IKEA side too. Now they are following reasons while we are growing, maximizing our market share, the competition of ours in Europe is struggling with what manufacturing -- due to inflation, due to tariff on Europe and the higher euro and pound. So, I think we are still just waiting that the moment the tariff war is over and we're able to solve a solution. I think we are expecting some upside. And for that, 100,000 we are doing now, but there could be a potential of another 150,000 sinks immediate capacity ramping up expansion what we need to do. So, total can be about 250,000 units within the next 4 to 6 months' time.

Got it. Got it. And sir, just a final question on quartz sinks. What percentage of our quartz sink revenue currently is coming from U.S.

Approximately 30%.

Hold on. Hold on. You are asking about the exports, right?

Yes, U.S. -- export U.S.

No, as a percentage of quartz sinks, total quartz sinks, out of the total [indiscernible] number, what percent is dependent on U.S.

Okay.

Has it [ been answered ].

Yes. Yes, 30s

We take the next question from the line of Resham Mehta (sic) [ Resha Mehta ] from GreenEdge Wealth.

Congrats for a strong set of numbers. So, the first one is on the U.S. tariffs, right? So, since the tariffs kicked in, in around end of August, so would you have seen like good exports happening or decent exports happening even in the month of September? Or was all of it preponed for this quarter before the tariffs kicking in?

No, no. So, we have grown organically whatever the Lowe's business or the U.S. business with the new clients, what we have been growing, nothing has been preponed. I think, on the contrary, we have done like postponed because we had some bottlenecks with the capacity. So, nothing is preponed. We probably have more sales maybe U.S. in September than in August.

And on the surfaces business, so just wanted to understand, our United Granite business is -- has its own manufacturing facility in the U.S. and hence, that is completely insulated from the tariff war. Would that understand right?

Yes. Yes.

And what kind of surfaces do we manufacture in United Granite? Is that only hard? Or again, is there a scope to kind of move to soft surfaces also just like the way you elaborated.

No, U.S. is a very different ball game. U.S. is only hard surfaces. We go from exotic marbles to quartz and granite. So, 100% in hard surfaces.

So, can you just elaborate because Surfaces is now like 25% of our revenues. Like, who were the competition here in hard surfaces and soft surfaces. If you could name a few brands, a few players, both globally as well as in India? And would you say that Pokarna which is an Indian player, would they also be a competition? So just some light on the peers over here in both hard and soft.

So we are not manufacturing surfaces. We are fabricating. So, we are a fabricator, not a manufacturer of the surfaces. So, we buy from different sources across the world, whoever gives us cheaper. I mean if we are not able to get Pokarna at a good rate, we'll move to someone else.

So, in terms of the value addition, so it's more desirable to be a fabricator rather than a manufacturer. Would that understanding be right, the value chain would be higher up?

I would say you have lesser risk in fabrication because if you are a manufacturer, you can hit by tariffs. Here you have a flexibility to choose on what you want to buy as per the customer needs. So that gives you a lot of flexibility. And I think second is that you are -- have a technology to fabricate full kitchen surfaces, which eventually I want to get this to our country. And I've been saying it again and again. We are just too busy with our sink, faucet appliances, but maybe like in a year, we may start put up our first fabrication or maybe in the next 3 months, 6 months to start this fabrication business in our country.

And there would be an export opportunity from India?