Orient Ceramics-15jun2k5-Hameed

Orient Ceramics(BSE 530365),-A New Glaze

New Delhi based Orient Ceramics and Industries (OCIL), (BSE 530365), is tipped to turn out as the winner in the domestic ceramic wall, floor and roofing tiles segment. If the first nine month numbers of Fiscal 2005 are an indication the corporate seems to be moving well and truly on the success ladder. In the nine months to December 2004, while Revenues were placed at Rs 85 crore, after tax profits were placed at Rs 3.43 crore. The profits are nearly double the Rs 1.95 crore that OCIL earned in Fiscal 2004. The corporate has a small equity of Rs 4.6 crore (half of which is a result of a bonus issue given by the corporate some years ago), owned about 75 per cent by the Daga family.

The CMP of Rs 68 gives Orient ceramics a market cap of a mere Rs 30 crore, and annualised FY05 EPS of Rs 11 values the scrip at just 6 times estimated earnings for FY05. The scrip on market cap and PE valuations appears cheap, a multiple of 10 would be more acceptable considering the huge growth in construction and building of new homes that is taking shape around the nation, as also replacement demand for flooring and wall tiles and switching consumer preferences from mosaic to ceramic tiles.

With the corporate turning into an aggressive marketing driven company, bringing in imported vitrified tiles and sanitary ware, and launching large size tiles, roof top, garden and swimming pool tiles the product portfolio has been optimally beefed up.

OCIL has its manufacturing facility at Sikanderabad (Uttar Pradesh) with an installed capacity of 95000 TPA of glazed tiles. In 2004, OCIL introduced the Novista collection-joint-free tiles. These large format tiles are hairline joined, with a reportedly invisible grout thus providing a smooth visual effect that gives a feeling of space. The tiles are covered with a layer of ceramic glaze, which as a result don't stain and require zero maintenance. Orient's Novista collection is available in a variety of patterns and colours.

OCIL also launched what they claim is the largest wall tile in India-with dimensions of 400x300 mm (16x12 inches).The Super Tile, as it is called, enjoys certain advantages over other tiles. The most obvious, of course, is greater visibility for its design. Because of its big size, you see more of the design. A marble design is a little window taken out of actual marble. One zooms into that portion of the natural marble that appeals to the eye. That is how a marble tile design is defined. When you want to use marble aesthetically, big is beautiful. The larger the size of the tile, the more of the design you are able to see.

In smaller tiles, of around 8x12 inch or 6x8 inch dimension, there are more joints interfering with the design in the same area. With fewer joints, bathroom space, for example, looks more expansive and the window of the design looks a lot bigger. The king-size tiles have superb dimensional accuracy, flip shades, easy maintenance and trendy designs.

These Super Tiles are available in five designs and eight colours: Dove, Sepia, Rose, Whiskey, Brass, Silver, Bianco and Mint.Most of the special features of the tile emerge from its size. Because of the large size, all the five design variants-Cintia, Rio, Kristal, Evora, Salonica and Salisburgo-look better here than on smaller sizes. Also, most of OCIL's popular designs, like the Alcora, the largest selling tile-range in the country, are also available in the Super Tile.

There are some very sober marble patterns that are perceived as exclusive by the tile market. People in an elite segment may prefer certain refined designs, which may not appeal to the other segments of society. It is all dependent on the colour mixing, the base and the design. Through OCIL's research and development and more than three decades of experience, realisation has dawned in that brown, white, blue and light shades of ivory are preferred by the discerning. Pink on the walls, for instance, may not appeal to everybody, but is very popular in North India, especially Rajasthan.

The Super Tile has a lustre finish, which imparts a sheen to the walls. They also have a durable long-term veneer, which helps retain a fresh gloss on the surface. All you have to do to retain the lustre is wipe it with a cloth. Late 2004 also saw OCIL launch a range of exterior tiles called Egyptian Rustics, which are meant for gardens, swimming pools, water parks and rooftops. Available in earthen colours, these floor tiles reportedly give a rural impression as they have a rough texture.

Orient Tiles is importing and marketing sanitary ware, Vitrified Porcelain Tiles and borders and pencils from various countries. The company is also marketing PVC Flushing Cisterns and various types of borders, motifs and pencils. All these are being marketed under the brand name "IRIS' and suit the needs of the most discerning.

It seems OCIL should pitch forth with higher valuations that its peer group comprising of Kajaria, EID Parry and Hind Sanitaryware fetch. OCIL could be the dark horse of the Ceramics industry.