Asian Granito’s 3QFY2017 results have come in line with our estimates on the
bottom-line front, while the top-line front disappointed. Revenue grew by ~4% yoy,
which is lower than our estimate. On the operating front, the company reported
margin improvement, primarily on account of lower raw material cost. Further, on the
bottom-line front, the company reported strong growth on account of favorable
operating performance.

Considering the various initiatives taken by the government like smart cities,
housing for all by 2022, and push towards providing sanitation would create a
new demand avenue for entry level or lower priced tiles (ceramic tiles). We expect
AGIL to report net revenue CAGR of ~9% to ~ 1,169cr over FY2016-18E. On
the bottom-line front, we expect CAGR of ~39% to 48cr over FY2016-18E,
owing to better product mix, higher B2C sales and amalgamation synergy.
Hence, we recommend a BUY rating on the stock.