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Aims to scale up non-plastic furniture vigorously; retaining a Buy

Nilkamal management expects 11-15% overall volume growth in FY23.
It aims to double revenue in the next 5-6 years, with 12-15% margins

Performance expected to be healthy. The demand environment seems
encouraging. Price hikes in material handling would continue as earlier higher
input costs were not fully passed on. In the furniture business, however, earlier
price hikes have been adequate.

Raw material tailwinds expected by Q4. Volatility in key raw materials such
as polyethylene and polypropylene continues. However, prices, which were
softer in Jul/Aug, started firming up in Sep. Management expects a favourable
pricing scenario from Q4 FY23.

Aims to be a one-stop home-furnishing-solutions provider. Plastic
furniture has a small market size, while in non-plastic furniture the opportunity
size is significant. Hence, after the Boston Consulting group report on the
furniture business revamp, the company is striving to scale up the non-plastic
furniture business.

Strengthening its manufacturing, marketing abilities in non-plastic
furniture. Capex at Hosur for non-plastic furniture is progressing. On the land
acquisition being completed by Dec, the facility is expected to be operational
within 6-9 months, ie, Q1/Q2 FY24.

Outlook, Valuation. The demand environment looks encouraging. Input cost
tailwinds would provide headroom for margin expansion. Hence, we expect
13% and 54% CAGRs over FY22-24 in revenue and earnings, respectively. We
have a Buy rating on the stock, with an unchanged TP of Rs.2,985, based on
22.5x FY24 earnings.

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