Why Dhabriyal Polywood?
#1. Dhabriya Polywood, a manufacturer of UPVC and PVC doors and windows, is expected to be a major beneficiary of the GST(Goods and Services Tax) since the rate applicable on PVC sheets for doors and windows is 18% compared with 28% in case of aluminium sheets. Moreover after GST, organized sector market share will increase hence it will help Dhabriyal to narrow the gap between local & organized players!
#2. The Jaipur-based company has close to 20 per cent market share in the organised PVC and UPVC doors and windows market. It has three plants in Jaipur and two in Coimbatore. Utilisation at these plants is 45-55 per cent. It will be setting up another plant in Bengaluru which will be commissioned by the end of 2017. Increase in utilization and commencement of new facility will add.
#3. Just like Mayur Uniquoters who manufacture artificial leather, Dhabriya Polywood manufacture artificial Italian marble thru Dstona brand. In the past, it has been observed that companies with cheaper substitute products have given strong returns to shareholders. For instance another Jaipur based company, Mayur Uniquoters which introduced artificial leather has reported 30 times jump in profit in the last ten years while its market capitalization rose by nearly 100 times.
#4. Analysts expect the company to deliver 30% sales growth and 50% earnings growth between FY17 and FY20. Operating margin before depreciation (EBIDTA margin) in FY17 improved to 14.9% from 10.2% in FY13 and is expected to exceed 20% by FY20. The optimistic projections are based on the company’s introduction of artificial Italian marble under the brand Dstona. It costs around one tenth of the original Italian marble and still delivers 25% EBIDTA margin. Dhabriya has created this niche product and is the only manufacturer in India. It has made a capital expenditure of Rs 5 crore to set up this division which can generate up to Rs 25 crore of revenues annually. The product will start contributing to revenue from the current fiscal.
#5. In the beginning of current fiscal, Dhabriya merged its modular kitchen business subsidiary which reported Rs 20 crore revenue and Rs 0.6 crore EBIDTA and issued promoters shares of the listed company at Rs 127 per share.