Asian Granito

Asian Granito reported a robust Q3 FY26, with revenue growing 15.8% year-on-year to Rs. 423 crores, up from Rs. 366 crores in Q3 FY25. EBITDA saw a significant surge of 210% to Rs. 40.8 crores, compared to Rs. 13.15 crores in the prior year. For the nine-month period, the company achieved a positive PAT of Rs. 43.83 crores, a substantial turnaround from a revenue loss of Rs. 4.97 crores in 9M FY25.

The company has transitioned from a traditional, small-size manufacturing approach to investing in future ceramic and big format plants, leading to an increased overall sales realization. New product introductions like double digital product technology, architect-based designs, and robotic designs for quartz have improved per square foot realization by approximately Rs. 50. The sanitary and CPPT segments, with complete operations this year, are also contributing to the enhanced product mix.

Asian Granito is actively strengthening its retail presence, aiming for 500 exclusive showrooms in the coming time, with over 300 expected by March 2026. The company's distribution mix has shifted, with retail now accounting for 45% of sales (up from 30%), while institutional, sales, and government projects make up 55%. This focus on quality dealers and exclusive showrooms is expected to drive future growth.

Exports currently constitute 15% of total revenue, with a target to increase this to 18-20% in the future. Despite past pressures from international duties, the company has established a strong retail base with warehouses and product displays in locations like Africa (Senegal), London, Dubai, and Indonesia. Management is optimistic about export growth, particularly in big formats and quartz, citing India's competitive advantage with an 18% duty compared to China's 34%.

The company's CAPEX for FY26 is projected at Rs. 25 crores, primarily for the final Continua slab plant which is expected to be continuously operational from April 2026. For FY27, CAPEX is estimated at Rs. 40 crores, allocated for warehouse and inventory investments related to big format and international presence. Strategically, Asian Granito plans to adopt an outsourcing model for ceramic manufacturing in the next 3-4 years, avoiding large greenfield CAPEX in this segment and focusing on product design and innovation.

The quartz segment faced significant pressure over the last year due to a 'break' in US exports, leading to domestic market oversupply and low prices. Consequently, overall growth in quartz was subdued. However, management is now seeing plants running again in the last 10-15 days and expects quartz to grow more than 20% in a quarter this year, indicating a potential recovery. The third quartz line, specifically for the US market, is currently at only 10% utilization, presenting a significant upside potential.

The Morbi cluster, a major manufacturing hub, has seen consolidation, with approximately 300 units closing in the past five years, particularly small production plants for GVT and wall tiles. While the region experienced rapid development, future expansion is somewhat restricted due to space constraints. This industry rationalization could benefit larger, technologically advanced players like Asian Granito.