Pokarna: A remarkably consistent compounder

disclaimer: All information is with the intent to educate. I have no holdings here.

Today, we will be going in depth on a company that has established itself in the Quartz market and has been performed remarkably well in the past. So let's begin!

Business history

Pokarna Limited was founded in 1991 by Shri Gautam Chand Jain in Secunderabad (Telangana), India. Jain, who had earlier made his mark in textile distribution, ventured into the natural stone business with an unconventional strategy – he began by acquiring granite quarries before setting up processing facilities. This backward integration approach ensured control over raw material supply and was a paradigm shift from the traditional “processing-first” model. In the 1990s, Pokarna established itself in granite quarrying and manufacturing, and over time it grew to become the largest exporter of finished granite in India (and one of the largest in Asia), with its products finding markets across North America, Europe, and the Middle East.

By the early 2000s, Pokarna diversified beyond granite. In 2003-04, under Jain’s leadership, the company forayed into apparel by launching “Stanza”, a premium men’s shirts and trousers brand. Although apparel was a different line of business, it leveraged the company’s entrepreneurial drive and was an attempt to broaden revenue streams. A few years later, Pokarna identified another opportunity: engineered quartz surfaces. In 2006, Gautam Jain conceived the idea of entering the quartz business, and this materialized with the setting up of a greenfield quartz surfacing plant in Andhra Pradesh in 2009. This state-of-the-art facility was the first of its kind in India, employing the patented Italian Bretonstone® technology, and marked Pokarna’s entry into engineered stone under the brand name “Quantra”. Over the last three decades, Pokarna has thus evolved from a granite quarrying company into a multi-segment enterprise with strong capabilities in natural granite, engineered quartz, and (until recently) apparel.

Key management

Gautam Chand Jain serves as the Chairman and Managing Director of Pokarna Ltd., and is the chief architect of the company’s growth. Under his vision, Pokarna grew from a single-product firm into a leading natural stone exporter and later a pioneer in quartz surfaces. Jain remains deeply involved in strategic decisions, including the push toward high-value products and technological upgrades.

The next generation of the promoter family is also active in management. Rahul Jain, Gautam Jain’s son, has been instrumental in the company’s diversification; he spearheaded the establishment of the Stanza apparel brand and has experience in finance and marketing. Rahul is an Executive Director and focuses on business development, bringing global exposure (with education from the University of Michigan) to the firm. Another family member, Paras Kumar Jain, is the CEO of Pokarna Engineered Stone Ltd. (PESL), the wholly-owned subsidiary that operates the quartz business. Paras Jain oversees the day-to-day operations of the quartz division and has been the face of the company in recent investor interactions, emphasizing the strategic shift to higher-margin products.

All in all, its a strong established leadership that has a lot of experience and have skin in the game, which is key for success.

Industry analysis

Granite (Natural Stone) – Granite is one of the most abundant natural stones, with substantial reserves found on every continent. It forms a significant part of the global dimensional stone industry. The market for granite (often grouped with marble and other natural stones) is massive in volume: one estimate projects the global Granite/Marble/Stone market to reach 26.2 billion metric tons by 2027, growing at ~4.9% CAGR from 2020 levels. Major source countries like China, Brazil, and India have extensive granite deposits and dominate production. These countries not only fulfill domestic demand but also supply granite blocks and slabs worldwide. Overall, granite demand tracks construction and architectural trends – it remains a favored material for countertops, flooring, and cladding in both residential and commercial projects due to its durability and aesthetic appeal. The natural stone industry is mature, but still growing modestly, especially in emerging economies’ construction sectors.

Quartz – Quartz as a mineral is one of the most plentiful on earth. However, in industry terms “quartz” often refers to engineered quartz surfaces (sometimes called engineered stone), which are man-made composites using natural quartz. This segment has seen robust growth over the last decade. Globally, engineered quartz has rapidly gained market share in the countertop market – rising from just 7% of countertop sales in 2012 to ~14% by 2022 . The momentum is expected to continue: demand for engineered stone (quartz) countertops worldwide is forecast to grow around9% annually through 2027, reaching an estimated 128 million square meters of annual demand by 2027 . In value terms, the broader countertop market (all materials) could be worth ~$55 billion by 2027 , with quartz surfaces contributing a significant share of the growth. High purity quartz reserves (used for engineered stone) are ample, with India being a key source (states like Rajasthan, AP, Telangana produce significant quartz raw material) and other countries like Turkey also supplying quartz lumps. Thus, raw material availability is not a major constraint; rather, technology and manufacturing capacity determine output.

The growth prospects for quartz (engineered stone) are currently stronger than for granite. As noted, engineered quartz surfaces are projected to grow at ~9% CAGR globally, outpacing many traditional surfacing materials . In fact, quartz is on track to overtake granite in popularity for countertops – it is expected to surpass granite and even laminates to become the world’s second most popular countertop material (after solid granite and marble combined) in the coming years. Drivers include consumer preference for low-maintenance surfaces, a wide range of designs, and consistent quality that quartz offers.

Fastest-Growing Markets & Segments: The demand is not uniform globally. North America (especially the U.S.) is currently the largest market for quartz countertops, accounting for ~35% of global engineered stone demand in 2022. The U.S. countertop market, being large and mature, grows in the low-to-mid single digits annually. In contrast,Asia-Pacific is the fastest-growing region for both natural and engineered stone, driven by construction booms and rising incomes. China, for instance, is a huge consumer and producer of granite and is forecast to grow its stone demand around7.9% CAGR from 2020 to 2027, outpacing global averages. India and other developing countries are also seeing growing domestic use of granite and quartz as urbanization and real estate development accelerate.

What is the difference between the two?

Nature and Composition: Granite is a 100% natural stone, an igneous rock quarried in large blocks from the earth. Each granite slab is unique, featuring patterns formed by natural mineral crystals (like quartz, feldspar, mica) over millions of years. Quartz surfaces, on the other hand, are engineered stone products – typically about 90-95% crushed natural quartz (one of the hardest minerals), mixed with resin binders and pigments, and cast into slabs using vacuum vibrocompression technology . In essence, granite comes directly from nature (cut and polished), whereas quartz surfaces are man-made composites that use natural quartz as an ingredient.

Both materials are known for durability but have some differences. Granite is extremely hard and heat-resistant; hot pans can often be placed on granite countertops without damage. However, being porous to some degree, granite requires sealing (usually annual or bi-annual) to prevent staining from oils or acids. It can also chip if struck sharply at edges (though this is infrequent given its hardness). Engineered quartz is non-porous – the resins fill any voids – making it highly resistant to stains and bacterial growth, a key advantage in kitchens. Quartz surfaces are also very scratch-resistant and do not need sealing, and their flexural strength is typically higher than granite (meaning they may be less prone to cracking during fabrication or transport). However, quartz has lower heat tolerance than granite; excessive heat can scorch the resin or cause thermal shock.

Industry value chain and company's positioning

credits: Congruence advisors

Since majority of the revenue (94%) of Pokarna comes from Quartz, lets focus on the value chain of Quartz.

It begins with raw material sourcing: quartz manufacturers need crushed quartz (which can be sourced from quartz mines or as a by-product of other mining), as well as resin and chemicals. These inputs are then used in a manufacturing process – typically involving the patented Bretonstone® system or similar technology – to produce slabs. The manufacturing requires significant technological know-how and machinery investment, which creates a higher barrier to entry than basic stone cutting. Post this, there is fabrication which is basically the final touches that create the final product. It consists of cutting, polishing, etc.

After production, quartz slabs enter distribution channels : they go to distributors, retailers, or directly to large installers, and finally are fabricated and installed in homes or buildings. Pokarna’s position here is as an established manufacturer with end-to-end capabilities (minus owning quartz mines). Pokarna imports high-quality quartz lumps (it sources ~60% of its quartz raw material from Turkey, for example) to ensure consistency, and combines this with its in-house manufacturing. The company made a strategic decision to invest in the Bretonstone technology early, which is considered the gold standard for engineered stone. This allowed Pokarna to produce world-class quartz surfaces under its brand “Quantra” and meet international quality benchmarks. Many smaller manufacturers use cheaper Chinese machines, which can result in lower density or less durable slabs, and often target the low-end market. In contrast, Pokarna’s use of Breton equipment and continuous R&D means it can command the high end. It sells quartz products in two ways: (1) under its own Quantra brand (focusing on luxury designs and large format slabs), and (2) as an OEM/private label supplier for other brands or large retailers. For instance, Pokarna’s quartz surfaces have been sold through big-box home improvement chains in the US (via partnerships), though not always under the “Quantra” name. This dual approach places Pokarna firmly in the global value chain as a preferred supplier of premium quartz surfaces. With its new expansions, it is one of the largest single-location producers of quartz in the world, which attracts bulk buyers who need consistent supply. The company’s integration in the quartz chain isn’t backward into mining, but it has strong links with raw material suppliers and a robust in-house process. Therefore, Pokarna’s value chain position in quartz is that of a technologically advanced manufacturer and exporter, with brand presence and private-label relationships that connect it directly to end markets. This position is strengthened by over 15 years of operating in the segment, giving Pokarna experience and credibility that newer entrants lack.

Realization and profitability trends

Granite Segment: The granite business has faced challenges in recent years, impacting realizations. Granite is a more commoditized product globally now; competition from countries like Brazil (with ample quarries and low costs) and China (which re-exports processed granite) has put pressure on prices. Pokarna’s granite average selling prices (ASPs) depend on the color and finish – rare colors still fetch premium rates, but mid-range colors face pricing stress. Furthermore, Pokarna has had lower capacity utilization in its granite factories (partly due to COVID-19 slowdown and partly due to demand shift), which increased unit costs. As a result, the granite division’s profitability has been erratic. For example, in some quarters, Pokarna’s granite segment has even reported operating losses due to insufficient volumes to cover fixed costs. Historically, granite had EBITDA margins in the teens, but recently margins have dropped to single digits or negative in bad quarters. Realizations per square foot for granite slabs have not grown significantly; any increase in premium colors has been offset by volume decline in lower-end products. Pokarna has tried to improve granite margins by cost control and focusing on value-added cut-to-size orders. However, given the global glut of certain granite types, this segment remains lower-margin for Pokarna. In FY24, granite constituted only ~6% of the company’s revenue , and management is taking steps to revive it (or at least stop the losses) by exploring new markets and perhaps new applications for granite. Overall, granite product realizations are stable to declining, and the company’s strategy is to cater to niche demands (where better pricing power exists) rather than volume sales at low prices.

Quartz Segment: Pokarna’s engineered quartz surfaces command much higher realizations per unit area than its granite products. This is due to both higher intrinsic value (manufacturing cost and market demand) and Pokarna’s deliberate focus on the premium segment. Many Indian quartz exporters compete on price with basic designs, but Pokarna has positioned Quantra as a premium brand, with large slabs and intricate designs, targeting the upper end of the market. Consequently, Pokarna enjoys higher average selling prices and gross margins in quartz compared to peers . According to industry analysis, while some competitors cater to low-end markets with Chinese machines, Pokarna’s use of Breton technology and focus on quality gives it a gross margin of ~60-65% in quartz, far above the ~25-30% gross margins that leading global player Caesarstone recently had. This gross margin translates into healthy EBITDA margins for quartz. Indeed, Pokarna’s quartz division EBITDA margins have typically been around 30% (±5%). For instance, in FY24, despite a challenging environment, the quartz segment EBIT margin improved to ~28.8%, up from ~20% in FY23, as the product mix shifted to higher value designs. The company consciously reduced production of low-margin quartz products and focused on those with better realization, which improved margins.

Business overview

Pokarna had three business lines: Granite, Quartz and Apparel. However, they have shut the Apparel business and now are solely focusing on the other two segments.

Over time, Quartz has become the dominant segment for revenue generation with over 94% as its revenue contribution. The reason for this has been multifold. Firstly, the granite business became overly competetive with vicious competetion from China. Secondly, The high competetion eroded the margins and made the sector unattractive relative to its past. Finally, Quartz is a rising sector with very attractive realisations which made the relative choice between the two easy.

Granite division

Pokarna’s origins lie in natural stone, particularly granite, and over the years it has established itself among India’s premier granite exporters. In this division, the company is fully integrated: it both owns quarries for sourcing select premium granite and operates state-of-the-art processing facilities to convert rough granite blocks into slabs or cut-to-size finished products. Pokarna’s captive quarries, located primarily in southern India, allow it to maintain consistent quality and reduce reliance on external raw material suppliers. These blocks are brought to the company’s processing plants, where modern equipment—like multi-wire saws and automated polishing lines—produce high-quality polished slabs of various thicknesses and finishes (honed, flamed, leathered, etc.).

Pokarna exports these granite slabs and value-added products to markets worldwide, with significant demand coming from the United States, Europe, and parts of Asia. Its product portfolio includes a wide array of granite colors—from India’s iconic Black Galaxy and Coffee Brown to exotic, multicolored varieties. These find application in kitchen countertops, flooring, cladding, and monuments. While the global granite market can be competitive, Pokarna’s advantages in quarry ownership, technology, and longstanding relationships with international distributors help it capture a notable share of high-end and specialty granite exports.

Quartz division

Recognizing emerging trends in interior design, Pokarna ventured into engineered quartz surfaces—often called “quartz”—over a decade ago. This division has rapidly grown to become the company’s primary revenue driver and source of profitability. Engineered quartz is made by combining crushed natural quartz (one of the hardest minerals) with resins and pigments, then curing the mixture under heat and pressure. Pokarna employs Bretonstone® technology from Italy, considered the gold standard for engineered stone production. This ensures superior consistency, high density, and varied design possibilities—ranging from marble-like veined surfaces to modern, monochrome slabs.

Under its proprietary “Quantra” brand, Pokarna offers quartz slabs in multiple sizes, including super-jumbo formats to suit large kitchen islands and seamless installations. The company has also invested heavily in new production lines—such as the recently commissioned second facility—that have more than doubled capacity. These modern lines enable it to meet growing global demand, particularly in the United States, where anti-dumping tariffs on Chinese quartz have opened the market to alternative sources like India. In addition, Pokarna is continuously upgrading its technology (for example, introducing Kreos and Chromia lines) to develop ultra-thin, full-body quartz surfaces and digitally printed designs.

Capex trends

Pokarna has made strong commitments to capacity expansion.

The company continually spends on process innovation (robotic polishing lines, etc.) to bolster productivity. Pokarna is now further investing in advanced manufacturing tech: it has acquired two new innovation lines from Breton S.p.A – the “KREOS” line (for full-body, ultra-thin quartz slabs with unique aesthetics) and the “CHROMIA” digital printing line. These are slated for commercialization in FY2024-25. Management expects these upgrades to enable differentiated products (e.g. intricately patterned slabs) and strengthen Pokarna’s market position and margins in the coming years

The company is adding a third breton stone production line costing 440 crores in Telengana. The company aims to commercialise it by March 2026 and is expected to do asset turns of 1-1.25x which translates to about 500 crores of revenue. Moreover, the company expects EBITDA of 150-165 crores and PAT between 100-110 crores from this line.

Thesis

Capex : The recent capex such as the technological advancements and the third facility will play a significant role in boosting revenue and margins. The expansions will allow it to position itself in the ultra luxury market and also enter other markets such as Canada and Europe.
Strong management: The management has held an excellent record and have delivered strong growth for the past decade. This should erase any doubts on execution and judgement.
Edge in tech: The technological edge Pokarna has helps it maintain extremely strong gross margins and also its competetive positioning. This comes on the back drop from Breton and is likely to expand with the new capex.
Strong cash position : The company has maintained a very strong cash flow conversion. The debt levels too have been moderate and the company aims to do its capex with a combination of internal accruals and debt.

Anti-thesis

US is a problem: 85% of the company's revenue comes from US. With threats of trade war and a looming recession, US is a far from ideal market to remain dependent on. The FED has been cutting GDP expectation while inflation is on the rise, the central government has been cutting spending , moving away from the dollar and with a strong rise in gold imports. All of which points towards a short term severe recession. And when there is a recession, housing definitely takes a hit. This anti thesis pointer prevents me from investing.
Raw material and realization risk: The prices of granite and Quartz fluctuate heavily. Hence, there will be inherent market risks when investing in such a company. We can see this when we look at the company gross margins which are still to reach pre-covid levels.
Competition: The technological edge prevents erosion, but its not impossible. They did lose the edge in granite and hence, Quartz division must be careful too. A company in Korea has already added Kreos.

Valuations and technicals

On the technical front, the company has done reasonably well during the correction phase. It has consolidated near its ATH and has seen a severe volume dry up. With the commercialization of the new lines and market conditions getting better, we can see a change in trend.

On valuations, the main growth will pick up when the htird line goes live. Hence, I do not expect a big jump in PAT in FY26. However, FY27 can be the big change. Considering a 15% PAT increase in FY26 and 30-35% in FY27, the current valuations seem favourable.

Thats the end of the blog!I hope it was a good read for all.