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
- The company had a decent quarter with consolidated revenues rising 32% YoY while PAT increased by 63% YoY.
- Sales volumes grew from 2.3Mn sheets in Q4FY22 to 2.73 Mn in Q4FY23.
- EBITDA margins stood at 17.1% while the contribution margin stood at 45.1%.
- Sales growth during the quarter was led by the export market, which was INR 151 crore and saw 36% YoY growth. Further, domestic sales also witnessed a significant uptick on a YoY basis, clocking sales of INR 86 crore (24.6% YoY growth.
- The working capital cycle stands at 93 days for the quarter (vs. 96 days for Q4FY23), due to an increase in receivables and inventory holding days and a decrease in payable days.
- Net debt stood at INR 21 crore on 31st December 2022 while Net worth stood at INR 412 crore.
Investor Conference Call Details:
- The company has reached about 80% capacity utilization level in the laminates division.
- It has started modular expansion at the existing facilities that will increase its capacity by up to 40%. This will entail a total Investment of INR 40 Cr.
- Board has approved the proposal for setting up a plant for the manufacture of laminates in its wholly-owned subsidiary company M/s Stylam Panels Limited. The total cost of the project will be 150 crores.
- The company has filed for anti-dumping duty in Acrylic surfaces as it believes Koreans are dumping this in the Indian market owing to the subsidies they receive.
- The company added a new machine in the Acrylic segment as it believes the market is huge.
- The company’s new 150 Crs capex is planned to be done in FY24 itself as it already has a land & subsidiary to start that business where it will produce value-added laminates for exports purpose with the expected sales of 500 Crs in peak capacity.
- The current plant post 40% brownfield expansion will have a minimum revenue potential of 1200-1300 Crs.
- The company is able to maintain its pricing in the market Vs peers despite a reduction in Raw material prices as it previously increased the prices marginally Vs its peers, hence, this stability & expansion in margin is being seen.
- In the exports segment, Europe contributed 40-45% while the US contributed 5%.
- The CFO stood at 95 Crs, therefore the company expects internal accruals to contribute close to 65% of the new capex.
- The receivable days have improved from 66 days to 48 days.
- The management is expecting the margins in the new capacity to be higher owing to the size being different & less competition in that particular product segment.
- Volumes in Southern India grew by 40-45%.
- Margins are expected to rise owing to lower container costs in export markets, coupled with better brand presence in the domestic market & higher contribution from value-added products.
- The company is seeing higher demand from the new housing segment & expects the coming quarter to be very good in the domestic market owing to higher brand awareness.
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 64% YoY. The company recently announced a new brownfield & greenfield capex of 40 & 150 Crs respectively which will ensure growth in the coming period. 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.
Financial Results & Highlights
- 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.
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.