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Expect 17% Revenue CAGR, assign BUY!

Result Synopsis

Stylam Industries Ltd (SYIL), registered a revenue of Rs2.39Bn, remaining flattish on YoY basis & growth of 12%QoQ, wherein domestic revenue (30% of sales) declined by 15%YoY while export (70% sales) biz grew by 10.6%YoY. Volumes for the quarter stood at 3mn sheets, a growth of 11.4%YoY & 8.6%QoQ (2-year CAGR stood at 15%), ASP came in at Rs789 Vs Rs835/Rs766 in Q4FY23/Q3FY24, respectively. EBITDA margins came in at 20% as compared to 17%/22% in Q4FY23/Q3FY24, respectively. On YoY basis, operating margins improved due to reduction in input cost, wherein COGS as %sales stood at 48% Vs 55% in Q4FY23. However, on sequential basis the margins contracted owing to higher other expenses. Going ahead we expect Laminates revenue to grow by 15%CAGR over FY24-FY26E which will largely be driven by volume growth on account of healthy demand in export markets and company’s growing presence in domestic market. We expect domestic revenue to increase by 18%CAGR & Export biz to grow by 13%CAGR over FY24- FY26E. We believe mix of domestic-export to come in at 35%-65% by FY26E as compared to 33%-67% in FY24. Moreover, the acrylic segment should contribute materially from FY25E and is likely to accelerate growth. We reckon with stable input cost; the operating margins are likely to remain at 20% over FY24-FY26E. At CMP, the stock trades at P/E(x) of 18x/16x on FY25E/FY26E EPS of Rs88/Rs102, respectively. We continue to value the company at 20x on FY26E EPS, arriving at a target price of Rs2,034. Hence, we assign a BUY rating to the stock.

Result Highlights

* Revenue for Q4FY24 stood at Rs2.4Bn, a growth of 12%YoY & flattish QoQ. FY24 revenue degrew by 4%YoY to Rs9.1Bn.

* EBITDA margins for the quarter came in at 19.9% Vs 17.1%/22.3% in Q4FY23/Q3FY24, respectively. Absolute EBITDA for the quarter improved by 17.6%YoY & remained flattish QoQ to Rs477Mn. FY24 EBITDA came in at Rs1.8Bn, a growth of 19%YoY with an EBITDA margin of 20.2% Vs 16.3% in FY23.

* Net profit increased steeply by 40%YoY & 20%QoQ to Rs376Mn in Q4FY24 on account of a deferred tax rebate of Rs80Mn. FY24 net profit stood at Rs1.3Bn, a growth of 34%YoY.

* Volume for Q4FY24 stood at 3.04Mn sheets, a growth of 11.4%YoY & 8.6%QoQ and was 11.8Mn sheets for FY24 flat on a YoY basis. Average realization for Q4FY24 came in at Rs789, a decline of 5.4%YoY & an increase of 3%QoQ.

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