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Steady set of numbers, Maintain BUY!

Result Synopsis

Stylam Industries Ltd (SYIL) registered a steady set of numbers. Company’s revenue stood at Rs2.34Bn (Vs our est of Rs2.31Bn), reporting a growth of 32%YoY & a decline of 5%QoQ. Exports revenue (66%sales) stood at 1.54Bn,registering a 35%YoY growth & a 6% sequential decline. Domestic revenue (34%sales) grew by 16%YoY & degrew marginally by 2.4%QoQ. Laminates vols came in at 3.01mn sheets in Q3FY23, a growth of 25.4%YoY & decline of 6%QoQ. Realization improved by 2%YoY & remained flattish QoQ to Rs752/sheet. Margins for Q3FY23 came in at 16.8% as compared to 18.7% (revised nos)/16.1% in Q3FY22/Q2FY23 respectively. Absolute EBITDA stood at Rs394Mn, a growth of 19%YoY & remained flat sequentially. Net Debt stood at Rs470Mn as on Dec’22. Working capital cycle during the quarter expanded to 96days Vs 82days in previous quarter, owing to increase in receivable & inventory days & contraction in payable days.  

We continue to remain positive on the company’s growth plan & reckon SYIL’s laminates volumes to grow by 23%CAGR over FY22?FY24E. Incremental 40% capacity, should further boost company’s performance. Acrylic biz will also accelerate SYIL’s top?line growth from coming fiscal. Hence, we expect revenue growth of 33% over FY22?FY24E. We reckon EBITDA margins to improve steadily & come in at 15.5%/16.5% in FY23E/FY24E respectively. We reiterate our BUY rating on the stock with a target price of Rs1,534 (revised upwards by 7%), valuing the company at P/E(x) of 20x on FY24E EPS of Rs76.7.

Result Highlights

* Revenue for the quarter stood at Rs2.34Bn, reporting a growth of 32%YoY but declined by 5%QoQ. (est Rs2.31Bn).

* Sales vols stood at 3.01mn sheets (Vs est of 3mn sheets), reporting a growth of 25.4%YoY growth & a decline of 6%QoQ. ASP came in at Rs752/sheet, as compared to Rs737/Rs751 in Q3FY22/Q2FY23 respectively.  

* Acrylic revenue stood at Rs75Mn in Q3FY23 Vs Rs60Mn in previous quarter.

* EBITDA margins came in at 16.8% as compared to 18.7% (as per revised numbers) in Q3FY22 & 16.1% in Q2FY23, improving by 70bps owing to lower other expenses as %sales. Margins were better than our expectations by 130bps. Absolute EBITDA stood at Rs394Mn, registering a growth of 19%YoY & remained flat QoQ.

* Net profit stood at Rs240Mn (Vs est of Rs222Mn), a growth of 54%YoY & flat sequentially.  

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