Buy Stylam Industries Ltd For Target Rs. 2,208 By Yes Securities Ltd
Result Synopsis
Stylam Industries Ltd (SYIL) reported a healthy topline growth of 18.6%YoY, driven by improvement in ASP of 9%YoY coupled with volume growth of 9%YoY over similar period (2-years volume CAGR stood flat). Export sales (73% of total) grew by 29%YoY lead by 18% growth in volumes (59% of total volumes) and 10% improvement in realizations over similar period. Domestic revenue (27% of sales), declined marginally by 3%YoY owing to 3% decline in volumes and flat ASP over Q3FY24. Operating margins contracted to 18.1% Vs 22.3%/20.7% in Q3FY24/Q2FY25 respectively due to higher input cost which dented gross margins leading to contraction of 491bpsYoY & 489bps QoQ to 45.3%. Net profit decline was steep on account of higher tax rates during the quarter. On 9MFY25 basis, revenue grew by 13%YoY and EBITDA margins came in at 18.7% Vs 20.3% in 9MFY24. Overall laminate volumes increased by 5%YoY in 9MFY25.
Our View
We believe new orders & clientele in export markets will continue to drive the growth for SYIL going ahead. In domestic markets, company is taking multiple steps to enhance their presence, though the same is yet to deliver meaningful improvement in performance. However, on the back of lower than expected growth for 9MFY25, we have revised our volume expectations downwards from 12%YoY growth to 7%YoY for FY25E and margins have been revised downwards by 150bps to 18.5%. Going ahead, we expect Revenue/EBITDA/PAT growth of 22%/22%/21% respectively over FY24-FY27E. At CMP, the stock trades at P/E(x) of 19x/16x on FY26E/FY27E EPS of Rs96/110. We have revalued the company at 20x on FY27E EPS, arriving at a target price of Rs2,208 and maintain our BUY rating on the stock.
Result Highlights
* Volume for Q3FY25 stood at 3.04Mn sheets, a growth of 9%YoY & decline of 5%QoQ. Average realization for Q3FY25 came in at Rs837, an increase of 9%YoY & 6%QoQ.
* Revenue stood at Rs2.54Bn, a growth of 19%YoY (5% above est) & degrew by 3%QoQ. Export revenue (73% of sales) expanded by 29%YoY & remained flattish QoQ to 1.86Bn and domestic revenue (27% of sales) contracted by 3%YoY & 8%QoQ at Rs690Mn.
* EBITDA margins came in at 18.1% Vs 22.3%/20.7% in Q3FY24/Q2FY25 respectively. Absolute EBITDA declined by 4%YoY.
* Net profit stood at Rs298Mn, a decline of 5%YoY.
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