Stylam Industries is engaged in the manufacturing of decorative laminates under the brand name “STYLAM” and exports its products primarily to European and South East Asian countries.
It manufactures a wide range of high-quality decorative laminates, specialty surfaces, PU+ lacquer coating, solid surfaces, and compact laminates.
The Co. is the largest Laminate Producing group in India. About two-thirds of revenues are derived from exports to over 65 countries; the balance is derived from presence across the Indian subcontinent.
Financial Results & Highlights
Detailed Results:
- The company had a decent quarter with consolidated revenues rising 32% YoY while normalized PAT increased by 50% YoY.
- Sales volumes grew from 2.4 Mn sheets in Q3FY22 to 3.01 Mn in Q3FY23.
- EBITDA margins stood at 16.8% while the contribution margin stood at 44.1%.
- Sales growth during the quarter was led by the export market, which was INR 154 crore and saw 35.3% YoY growth and 6.2% QoQ degrowth. Further, domestic sales also witnessed a significant uptick on a YoY basis, clocking sales of INR 80 crore (26.8% YoY growth and 2.7% QoQ degrowth).
- The working capital cycle stands at 96 days for the third quarter (vs. 82 days for Q2FY23), due to an increase in receivables and inventory holding days and a decrease in payable days.
- Net debt stood at INR 47 crore as on 31st December 2022 while Net worth stands at INR 385 crore.
Investor Conference Call Details:
- Management states the Inability to get containers from Russia which it sells to Ukraine via Poland lead to a revenue shortfall of 2-3%.
- Management states that solid acrylic which is an import substitute product generated decent sales of Rs.7.5 Crs in the current quarter & expects to double in Q4.
- The company is confident about booking higher margins in the coming period due to the use of new Raw material stock which the company got at a reduced price.
- Plant utilization stood at 80%.
- Maintenance capex per year will stand at Rs.10-15 Cr.
- The management states that the effect of Global supply chain issues is minimal on the company as it doesn’t produce anything without advance payment.
- Quarterly Domestic volumes increased from 9.05 lakhs to 12.15 lakh sheets YoY.
- The company has 200 distributors in the domestic market.
- Management explains that 60-65% of its turnover is from branded goods while in the non branded segment, its customers include ThyssenKrupp who use in their elevators and escalators & hence don’t need any brand.
- The current share of value-added products stands at 5-7%, however, the management is hopeful of increasing this share to 25-30% in 3 years timeframe.
- The management is targeting to clock 1800-2000 Crs from its existing capacity in the coming years.
- The total capex on the railing sheet has been around 50-65 Crs.
- The management believes that the credit period in the domestic laminates segment will reduce in the coming years as brand recognition increases.
- The govt is also planning to impose an anti-dumping duty in the acrylic sheets segment which will benefit the company.
- The company is not facing any logistics issues.
Analyst’s View:
Stylam is one of the largest laminate players in the country with a vast presence in the export market. It reported stellar performance with revenue growth of 32% & profit growth of 50% YoY. It remains to be seen how the company will be able to ramp up its domestic & acrylic product revenues coupled with the potential softening of demand in Europe. However, it remains an interesting stock to keep on one’s watchlist.