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The company received a buy call for a 65 percent potential upside from a brokerage firm due to its industry-leading growth and EBITDA Margin. The stock opened at Rs. 1,575.05 on Tuesday, while its previous closing price was Rs. 1,588.90. 

HDFC Securities has a ‘buy’ rating on Stylam Industries with an unchanged target price of Rs. 2,550 per share, representing a potential upside of around 65 percent from the prevailing stock price level.

The revenue of the company declined by 8.11% both in QoQ and YoY owing to weak demand in the domestic markets and lower export sales due to the Israel-Palestine conflict. 

However, the EBITDA margin improved by 200bps on a quarter-on-quarter basis to an all-time high of 22.3 percent on continued gross margin expansion, representing a QoQ recovery for the 7th consecutive quarter. 

While the company has completed its laminates debottlenecking expansion in Q3 FY23-24, it is working on the brownfield expansion costing between Rs. 200-225 crore, which is expected to be completed by Q3 FY24-25, and both of these expansions will double the company’s laminate revenue potential, according to the brokerage firm. 

With a market cap of Rs. 2,638.81 crore, Stylam Industries Ltd. has delivered nearly 40 percent returns in the last one year. So far, it has given negative returns of around 10 percent in 2024. 

As per the analysts at HDFC Securities, Stylam Industries can experience considerable growth in the US, with US sales potentially expanding multifold, contributing roughly 10-15 percent growth in revenue at a consolidated level. The gross and EBITDA margins are also projected to stay constant, except for Q4 FY23-24. 

Additionally, with the ongoing war in Israel, low volume in the domestic market, and expansion delays, the brokerage firm has reduced its volume estimates by about 5% each for FY24-26. 

In terms of financials, Stylam’s net profit increased 29.16 percent to Rs. 31 crore in Q3 FY23-24 from Rs. 24 crore in Q3 FY22-23, however, it decreased by 3.1 percent on a QoQ basis from Rs. 32 crore in Q2 FY23-24 to Rs. 31 crore in Q3 FY23-24. 

As of December 2023, FIIs hold 3.80 percent of the shares, whereas DIIs hold 12.02 percent of the shares in the company, aggregating to 15.82 percent of the institutional holdings.

Incorporated in 1991 as Golden Laminated Ltd., Stylam Industries Ltd. is engaged in the business of manufacturing laminates, solid surface panels & allied products, and runs Asia’s largest single-location laminate production factory.

Written by Shivani Singh

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