Aro Granite Inds - Rs.111.00

Incorporated in 1989, Aro Granite Industries Ltd (AGIL) is one of the largest manufacturers and exporters of modular granite tiles (polished and flamed) and slabs. In fact more than 5% of India’s total export of granite products are made by AGIL. The company has won CAPEXIL’s ‘Certificate of Merit’ award for three consecutive years and ‘Special Export Award’ for five years. It has access to rich natural stone deposits that enable it to provide clients with rare and exclusive colours. The marketing network of AGIL spans the globe and is currently meeting the granite needs of USA, Canada, Europe, Russia, Japan, Austalia, New Zealand, South Africa etc. Although exports account for over 95% of sales, there is increase in demand in the domestic market too with the emergence of multiplexes and large shopping malls and the boom in housing. Most airport projects use granite as the flooring material, which augurs well for the company.

It has two manufacturing units at Hosur in Tamil Nadu with an installed capacity of 180,000 sq. mt. of tiles and 295,000 sq. mt. of slabs. It is among the few companies having resining facility and the plants are equipped with the most sophisticated environment friendly granite processing machinery line from Italy. The strategic & geographical location of the plant ensures close proximity and direct access to quarries in South India, which are known for the finest and widest range of granites. Besides, to overcome the shortage of rough stones, it also sources its raw material from few other countries such as Saudi Arabia, Norway and Finland. Considering the growing international demand for granite tiles & slabs and the bulging order book position, AGIL is increasing the existing production capacity of both tiles and slabs by 360,000 sq. mt. and 95,000 sq. mt. respectively. The expansion is near completion thereby taking its capacity to 5,40,000 sq. mt. of tiles and 3,90,000 sq. mt. of slab. The total outlay for the expansion was about Rs.34 cr. funded by debt of Rs.24 cr. from ICICI Bank Ltd. and the balance from internal accruals.

In March 2006, Mr. Prem Arora, co-promoter and co-founder of the company exited this business and AGIL is now led by Mr. Sunil Arora only. Interestingly, Pearl Mineral Pvt. Ltd. a key supplier of rough granite blocks to the company, has taken about 14% stake, which ensures consistent and continuous supply of quality raw material. However, with the government support, the Indian Granite Industry is going to become the hub for sourcing world requirements. For H1FY07, sales increased by 45% to Rs.53.50 cr. and net profit tripled to Rs.8.50 cr. registering a half yearly EPS of Rs.12. For the full year FY07, it may clock a turnover of Rs.110 cr. and PAT of Rs.15 cr. i.e. EPS of Rs.21 on its equity of Rs.7 cr. For FY08 it can register an EPS of more than Rs.35. That means the scrip is trading at a P/E of merely 3 times against its FY08 earnings. Hence investors are advised to accumulate this scrip at sharp declines to double their money in 15 months.