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Shares of Orient Bell (OBL) hit a fresh all-time high of Rs 779 after they rallied 13 per cent on the BSE in Tuesday’s intra-day trade on strong business look. The shares surpassed their previous high of Rs 733, recorded on June 30, 2022.
In the past one week, the stock has rallied 34 per cent after Crisil ratings upgraded its ratings on the bank facilities of the company to ‘CRISIL A/Stable/CRISIL A1’ from ‘CRISIL A-/Stable/CRISIL A2+’. The rating agency believes OBL will continue to benefit from its established market position and comfortable financial risk profile. In comparison, the S&P BSE Sensex was up less than one per cent or 0.92 per cent during the period.
“The ratings upgrade factors improvement in the overall business and financial risk profiles of OBL. Operating performance has improved by revenue growth of around 30 per cent during fiscal 2022 from previous fiscal, backed by strong brand equity, and improved sales contribution from value added-products leading to better operating profitability,” Crisil said in a detailed rationale on June 28.
The rating agency further said that the company’s revenue should further improve by compounded annual growth rate (CAGR) of 10-12 per cent over medium term supported by healthy demand from real estate industry, diversification in product mix, underway capex and upgradation of plants.
The operating margin rose to 8.97 per cent in fiscal 2022 from 6.90 per cent in previous fiscals because of increased contribution of high margins products, long term contract for gases and modification in the plants, leading to better operating efficiency. Sustenance of improved profitability levels along with sales growth over the medium term remain a key rating sensitivity factor, it said.
The stock of one of the leading manufacturers of ceramic and vitrified tiles has zoomed 133 per cent from the low of Rs 335, touched on May 12, 2022, after the company reported a strong operational performance for the quarter ended March 2022 (Q4FY22).
Investor Porinju Veliyath held 145,000 equity shares, representing 1.01 per cent stake in OBL, at the end of Q4FY22, shareholding pattern data shows.
Despite rising energy and other costs, consistent improvement in consumption key performance indicators (KPI’s) and operating leverage led to improved profitability margins vs. last year. The company’s ebitda margins improved 170 bps at 12.5 per cent in Q4FY22 against 11.19 per cent in Q4FY21.
“Further, the growth in the tiles market will continue to be driven by growth in real estate and housing sector, rise in disposable income, growth in renovation & remodelling activities, renewed interest in ‘DIY trends in home improvement’ with the shift to Work-From-Home post the pandemic, focus on affordable housing, lower interest rates and increase in investments in the residential and commercial sectors (growing project and CAPEX launches by major players),” OBL said in FY22 annual report.
The customer has become more aware and is keen to engage in tile buying decision-making and designing the overall look of the home, the company said.
OBL has an annual capacity of around 31 million square meters, distributed across 3 plants, Sikandrabad, Hoskote and Dora and 2 trading JVs in Morbi. With over 3,000 designs and a strong distribution channel of 2000+ channel partners, the company has a growing presence across major markets in India. Last week, OBL announced on-time completion of capex projects adding incremental volume potential of 1.9 MSM p.a.
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