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Result Synopsis

Stylam Industries Ltd (SYIL)’s Q4FY23 revenue grew by 32%YoY & remained flat QoQ to Rs2.36Bn wherein export revenue (64% of topline), grew by 36%YoY & declined marginally by 2%sequentially & domestic sales (36% of revenue), registered a growth
of 24.6%YoY & 7.5%QoQ. Laminate volumes stood at 2.7mn sheets, growth of 18.7%YoY & a decline of 9.3%QoQ (2-year volume CAGR stood at 17%). EBITDA margins came in at 17.1% Vs 11%/16.8% in Q4FY22/Q3FY23. Net working capital
days came in at 93 in Q4FY23 Vs 96-days in previous quarter. Net debt stood at Rs210Mn as on FY23.

Utilization of laminates plant stood at 75-80%. Company is in process of expanding their existing capacities by 40% which will entail capex of Rs400Mn (50% done). Additionally, SYIL has decided to set-up new laminates plant for which company will
spend Rs1.5Bn which can deliver Rs5Bn revenue at peak (in next 2-3years). This plant will largely cater the export demand & will be value-added products.

We continue to remain positive on SYIL’s growth going ahead & expect company’s laminates volume/value to grow at CAGR of 15%/16% respectively over FY23- FY25E. Additionally, with robust growth in acrylic sheet division, overall revenue should grow by 19%CAGR over FY23-FY25E. We expect EBITDA margins to improve to 17.5% by FY25E, hence EBITDA should increase by 24% over next 2-years. At CMP, SYIL trades at P/E(x) of 17x/13.7x on FY24E/FY25E EPS of Rs70.3/88.3 respectively. We continue to value the company at 20x on FY25E EPS & arrive at a target price of Rs1,767. Hence, we retain our BUY rating on the stock.

Result Highlights

* Revenue stood at Rs2.36Bn, reporting a growth of 32%YoY & remained flattish QoQ (4% below our estimates)
* EBITDA margins came in at 17.1% as compared to 11%/16.8% in Q4FY22/Q3FY23 respectively (Vs est 16.8%). Absolute EBITDA stood at Rs405Mn, a growth of 3%QoQ & as compared to Rs199Mn in Q4FY22.
* Net profit stood at Rs268Mn, a growth of 62%YoY & 11.5%QoQ.
* Laminates volumes increased by 18.7%YoY & declined by 9.3%QoQ to 2.7mn sheets. Export sales grew by 36%YoY & remailed flat QoQ while domestic revenue increased by 24.6%YoY & 7.5%QoQ.
* For FY23:- Revenue stood at Rs9.52Bn, a growth of 44%YoY. EBITDA margins improved to 16.3% Vs 15.7% in FY22. Net profit grew by 57%YoY

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