Incorporated in the year 1977, Orient Ceramics Limited is known for its innovation in home décor. The company manufacturers Non-Vitrified, Vitrified, Ultra Vitrified and 3rd Fired Decorative Tiles for walls, floors & facades. The company also imports and markets Vitrified Porcelain Tiles, Borders, Motifs and other value added accessories from various countries to complement its wide range of tiles.

Key Highlights

Investments: The company is looking forward to invest Rs. 100cr in expanding manufacturing capacity for green field project in Andhra Pradesh and also for joint venture agreement.

Robust Earnings in FY11: The company’s management is confident about its earnings growth on account of volume growth, better realizations and emphasized high margin product mix. The export volumes are expected to increase manifold as OCIL has grown its presence across many nations worldwide.

Focus on Visibility Expansion: OCIL is eyeing on one lakh sq ft of retail area via company owned and operated showrooms and opening of new franchisees including shop-in-shop stores.

SECTOR:

Global Ceramic Tiles Industry

Globally, China is the largest ceramic tiles producer, accounting for 40% of the total global ceramic production. It is also the largest consumer of Ceramic tiles accounting for 34% of the world consumption. The US$ 36 bn world ceramic tiles industry is growing at 6% annually. The annual per capita consumption of ceramic tiles is led by Turkey at 2.44 sqm. India’s per capita consumption is a low 0.36 sqm.

Indian Ceramic Tiles Industry

India ranks among the world’s top five tile producing countries with a total annual production of around 450 mn sqm as on March’10.

The ceramic tiles industry is large, rapid, growing and populated by organized and unorganized manufacturers. Over the last few years, industry prospects were subdued on account of an oversupply and increasing imports. However, the environment recently turned favourable due to a combination of various factors: Economic upturn, growing demand from the construction and real estate sectors as well as a decline in dumping and oversupply. This scenario not only bodes well for the industry but your Company as well.

The industry can be classified into three key segments, viz., wall tiles, floor tiles and vitrified & porcelain tiles, with market shares of 35%, 53% and 12%, respectively. Vitrified and porcelain tiles are recent entrants into the ceramic tile industry and have increased the size of themarket considerably. This segment is expected to capture the bulk of the market gradually, replacing the conventional floor and wall tiles segment on account of durability, utility, maintenance and better appearance with premium pricing and higher realisations. In the international markets these tiles are already major sellers.

The anti-dumping imposition of Rs. 137 per sqm on ceramic glazed tiles imported from China will benefit domestic manufacturers.

COMPANY:

* Orient Ceramics & Industries Limited is the pioneer in manufacturing of Ultra Vitrified tiles in India.

* The company is the first in the country to have in-house European Designer. The company’s newly launched brands Europa and Stiler are hot picks among the Ceramic Industry because of their new and innovated designs.

* The company’s International Business Divison (IBD) was set up to exports to countries namely Dubai, Muscat, Oman, Sri Lanka, Maldives and Mauritius.

* OCIL has a direct dealer network of more than 1000 dealers across India.

* The company has three exclusive showrooms at Ahmedabad, Delhi and Sikandrabad. The Sikandrabad showrrom is 5000 sq ft which is especially established to cater to the increasing demand.

FUNDAMENTALS:

* The company’s revenue have been growing at a CAGR of 18.25%. There has been a consistent growth without a drop in the revenues of the company since last 5 years.

* The company is trading at a P/E of 5.83. The Industry P/E prevails at 9.27.

* The EPS of the Orient Ceramics & Industries Limited on TTM Basis stood at Rs. 14.63 which inturn states that the company is on growth path.

* During the current quarter i. e. Jun’10, the company’s revenue grew by 11.4% to Rs. 60.5cr and the bottomline grew by 249% to Rs. 5.31cr.

* The Operating profit Margin of the company for FY10 stood at 13.82% in comparison to 13.67% in FY09.