Stylam Industries is the fastest-growing laminate company in India. Buy for target price of Rs 2300 (32% upside)

Fastest-growing laminate company in India

We initiate coverage on Stylam Industries with a BUY rating and a target price of INR 2,300 (22x its Sep-25 EPS). We like the company for its industry-leading growth and EBITDA margins, healthy balance sheet, and return ratio profile. We believe it still has room to expand its geographical reach and penetration in existing domestic and export markets, offering strong revenue growth visibility. It is focusing on brownfield expansion and laminate debottlenecking to achieve its strong growth objective. In the acrylic segment, we expect rapid growth, albeit on a low base. We expect Stylam to post strong 15/23/26% revenue/EBITDA/PAT CAGRs during FY23-26E.

► No stopping; market share gain to continue: Stylam is gaining its market share in both domestic and export markets, and we expect this trend to continue. Over the last five years (FY18-23), it reported revenue/EBITDA/PAT CAGR of 23/26/37% respectively. Currently, exports account for two-thirds of Stylam’s revenue. It has a strong export team and has emerged as India’s second-largest laminate exporter. It is India’s largest laminate exporter to Europe (a quality-conscious market). We believe the company has plenty of room to expand its geographical presence and penetration in existing domestic and export markets, providing strong revenue growth visibility.

► Acrylic segment to grow at a rapid pace: Stylam is the first Indian company to manufacture an acrylic solid surface. On a low base, this segment is growing fast, having formed 2% of revenue in FY23. As Koreans/Chinese are dumping acrylic in India, management is confident the Indian government will impose anti-dumping duty on them. We expect this segment to grow at 54% CAGR during FY23-26E and account for 5% of its revenue by FY26.

► Capex plan in place to support strong growth: The company is working on a laminate debottlenecking project to increase this segment’s revenue potential by ~40% (partially completed). In FY24, it started work on brownfield laminate expansion (Capex: INR 1.5bn, expected by H1FY25 end), which has an INR 5bn revenue potential. This will increase its revenue potential to INR 18bn at the company level, offering strong revenue visibility. The acrylic segment is running at sub-10% utilisation and won’t require any Capex.

► Initiate coverage with a BUY rating: We estimate the company will deliver strong 15/23/26% revenue/EBITDA/PAT CAGRs during FY23-26E. We expect Stylam to continue to deliver industry-leading growth and EBITDA margins, healthy return ratios, and an improved value-added mix, which will lead to rerating. We initiate coverage on the company with a BUY rating by valuing it at 22x its Sep-25E EPS to arrive at a TP INR 2,300 (35% discount to Greenlam’s valuation multiple).