**About Company :**Stylam is engaged in the manufacturing of luxury grade decorative laminated sheets for both residential as well as industrial applications. More than 75% of its sales are from exports markets like Europe and US.
Capacity & Expansion Plans: Currently company has capacity of 6.4 million sheet with ~75% utilization level. Recently, company has announced addition of a new line with 2.4 miilion sheet capacity, which is expected to be completed by the end of FY16.
Growth Visibility: The company has registered robust sales growth with a CAGR of ~22% (10 years), 29% (5 years) and 32% (3 years) in the past, led by network expansions, entry into new markets for export, capacity expansion etc. Going forward, company is expected to register 20%+ growth in the topline on account of increased utilisation of current capacity and increase in the capacity from FY17 onwards.
Margins: Margins of the companies have been fluctuating due to unhedged currency exposure of the company. Last two quarters OPM was lower due to depreciation of Euro & Pound (~50% of sales).
Operating Efficiency: Core Assets turnover ratio (exclusing capex for BPO centre) of the company has been improving over the years due to increase in utilization and efficient working capital managment.
Returns Ratio & Profitabilty: ROE of the company has improved over the years and is above 20%.Net profit of the company has increased at a CAGR of 35% (10 years), 89% (5 Years), 22% (3 years)
**Earning Check:**The Company has been able to convert its profits in to cash flow from operations. PAT for last 10 years (FY2005-14) is INR 26 cr. whereas the CFO over the similar period is INR 38 cr, which is a good sign.
Concerns: The Company is doing capital expenditure in an unrelated field of business process outsourcing (BPO) in Panchkula, with the expected outlay of ~30 cr.As a result of which debt of the company is at higher level of ~2x.
Valuation: The company is trading at a decent valuation of 7x TTM and worth looking at. It has better financials as compated to its listed peer Greenlam and trading at significant discount.
Note: Let me know your views on the same so that we can dig further into the company.