ankit.k@smartsyncservices.com

  +91 99789 88562

  

Home / Stylam Industries

Stylam Industries

Print Friendly, PDF & EmailGet PDF

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.

Q4FY23 Updates

Financial Results & Highlights

Detailed Results:

  1. The company had a decent quarter with consolidated revenues rising 32% YoY while PAT increased by 63% YoY.
  2. Sales volumes grew from 2.3Mn sheets in Q4FY22 to 2.73 Mn in Q4FY23.
  3. EBITDA margins stood at 17.1% while the contribution margin stood at 45.1%.
  4. 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.
  5. 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. 
  6. Net debt stood at INR 21 crore on 31st December 2022 while Net worth stood at INR 412 crore.

Investor Conference Call Details:

  1. The company has reached about 80% capacity utilization level in the laminates division.
  2. 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.
  3. 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.
  4. 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.
  5. The company added a new machine in the Acrylic segment as it believes the market is huge.
  6. 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.
  7. The current plant post 40% brownfield expansion will have a minimum revenue potential of 1200-1300 Crs.
  8. 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.
  9. In the exports segment, Europe contributed 40-45% while the US contributed 5%.
  10. The CFO stood at 95 Crs, therefore the company expects internal accruals to contribute close to 65% of the new capex.
  11. The receivable days have improved from 66 days to 48 days.
  12. 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.
  13. Volumes in Southern India grew by 40-45%.
  14. 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.
  15. 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.

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 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.

Q3FY23 Updates

Financial Results & Highlights

Detailed Results:

  1. The company had a decent quarter with consolidated revenues rising 32% YoY while normalized PAT increased by 50% YoY.
  2. Sales volumes grew from 2.4 Mn sheets in Q3FY22 to 3.01 Mn in Q3FY23.
  3. EBITDA margins stood at 16.8% while the contribution margin stood at 44.1%.
  4. 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).
  5. 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. 
  6. Net debt stood at INR 47 crore as on 31st December 2022 while Net worth stands at INR 385 crore.

Investor Conference Call Details:

  1. Management states the Inability to get containers from Russia which it sells to Ukraine via Poland lead to a revenue shortfall of 2-3%.
  2. 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.
  3. 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.
  4. Plant utilization stood at 80%.
  5. Maintenance capex per year will stand at Rs.10-15 Cr.
  6. 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.
  7. Quarterly Domestic volumes increased from 9.05 lakhs to 12.15 lakh sheets YoY.
  8. The company has 200 distributors in the domestic market.
  9. 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. 
  10. 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.
  11. The management is targeting to clock 1800-2000 Crs from its existing capacity in the coming years.
  12. The total capex on the railing sheet has been around 50-65 Crs.
  13. The management believes that the credit period in the domestic laminates segment will reduce in the coming years as brand recognition increases.
  14. The govt is also planning to impose an anti-dumping duty in the acrylic sheets segment which will benefit the company.
  15. 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.