HSIL

HSIL, earlier known as Hindustan Sanitaryware & Industries, enjoys a 40 per cent market share in the organised sanitary-ware industry. HSIL has increased its portfolio by adding more products in its bathroom and kitchen appliances products; it launched around 150 new products last year, of which, 60 per cent was in the premium category. Further, it has also started to venture into marketing and distribution of imported products to capitalise on its existing brand and distribution network. Besides, HSIL plans to increase its existing capacity by installing another kiln at its Bahadurgarh plant at a cost of about Rs 15-20 crore.

HSIL is expected to deliver revenue growth of 20.2 per cent and 23.7 per cent in 2009-10 and 2010-11, respectively on the back of enhanced product portfolio, increased demand and capacity utilisation. Its EBIDTA margins could stabilise in the 17-18 per cent range. However, higher depreciation and interest costs could be an over-hang. In 2009-10, HSIL’s PAT is expected to remain flat while in 2010-11, the same could increase by 29.1 per cent. Being an industry leader, HSIL is well positioned in the north as well as south to tap potential demand and is expected to grow faster than the industry. At Rs 61.25, the stock is trading at 8.2 times its 2010-11 EPS of Rs 7.5.