Two positive updates from Stylam -
(1) Promoters have released pledged shares
(2) Amalgamation of subsidiary
1 Like
Decent results by Stylam.
- Debt reduced by 75 crores
- Debt to equity halved
- Loss due to exceptional item. (write down of investment assets after selling it for less than book value)
- Good operating cash flow
Disclosure: Invested.
2 Likes
Total 4 resignations in 2021
2 independant directors and c.s resigned in 2021
On 6.9.21
=Mr. Karan Mehra has
tendered his resignation from the Post of Company Secretary and Compliance officer of the Company
Any view from seniors?
Disc…invested
even the CFO has resigned today…
i have exited this stock today at current levels…
everything seems good…
but,why own something where there is a flurry of resignations??..
there r plenty of fish in the sea…
Repeated CFO resignation has definate significance
But repeated C.S. resignation has any significance?
Company is export oriented so difficult(but not impossible) to manipulate financials.
Any views?
Dis …invested
The entire point is…
when there is a flurry of resignations…
why stick to the company??…
my theory is…when it comes to corporate governance…even if u have an iota of doubt…
u just exit… (i have learnt this from @Worldlywiseinvestors )
i exited all holdings today…
3 Likes
You are perfactly right.
But i m just balancing my investment thesis and then take decision
1…Mukul agrawal is still invested upto sept 2021
2…M.F. holding increased by 4% in sept quarter
3…D/E ratio is continuously decreasing since last 8 yrs and since 2 yrs, significant decrease and they want nil debt by 2025
4…No single fraud surfaced till now in history of company on google search
5…Scruttlebutt
I have asked few dealers and all replied same
“It is export oriented big company”
I have further asked one more dealer and reply is awaiting
…
FINANCIALS
1…Cfo>pat(Last 10 yrs)
Cfo=250cr
Pat=200
2…fcf%.sales/.capex
2021=15%/ 7cr
2020=9%/24cr
2019= (-) /45cr
2018= 2.3% /10cr
2017= (-) /77cr
2016= (-) /37cr
3…ROE@
5yrs avg@15.6
10yrs avg@16.2%
4…OPERSTING MARGIN
2021@20%
2019@17%
2017@16%
2015@11%
2010@7%
5…op profit(avg) growth rate
Last 5 yrs@29%
Last 10 yrs@34%
6…Sales growth rate
Last 5 yrs@16%
Ladt 10yrs@21%
7…D/E RATIO
2017@2.2
2021@0.5
8…receivables% of sales
2021=20%
2020=19%
2019=17%
2018=17%
2017=16%
2016=15%
9…debtor days
2021@76
2021@69
2019=63
2018=58
2017=55
…
FUTURE GROWTH
1…Corian/solid acrylic surface
=Our entry into acrylic
solid surfaces presents a huge opportunity, going forward.
=The Company acquired Golden Chem-Tech Limited
2…Hot coating process
=Last year, the Company entered a new business vertical
of value-added laminates and came up with anti-finger
and high-gloss finishing on laminates through hot coating
process.
=Our Company is the only manufacturer to provide
such value-added finish on thin laminates. Customers
are satisfied with the finish and the product seems to be
gaining momentum now
3…Short cycle press
=Our Company has entered into new a segment and added
short cycle press for lamination of impregnated paper on
Medium Density Fibre (MDF) panels
=However,
during the testing of the plant certain teething issues
cropped up which were dealt efficiently, hence making it
commercially viable
4…Capacity expansion
=The Company expanded its production capacity from 11.0
Mn sheets to 14.3 Mn sheets per annum in the second
half of Q4 of FY20. However, due to nationwide lockdown,
the commercial production of the expanded capacity
commenced from May of FY21
5…Sell of property
=By the year end, the Company disposed of its investment
property, the proceeds of which were used in repayment
of debts.
=The funds realised were used in the debt repayment
hence the resultant savings in the interest cost is
expected to improve the bottom line of the company.
6…Company with a view to explore
more potential markets, incorporated a Wholly owned
subsidiary (WOS) named Stylam Asia-Pacific Pte. Limited in
Singapore on the September 16th, 2019. Howbeit, subsidiary
being in its inceptive phase has not yet commenced its
business operations.
7…During the year under review, the company has purchased
34% shares of Alca Vstyle Sdn Bhd.(Alca) Incorporated
in Malaysia. These shares were purchased from existing
shareholders. Alca is engaged in the business of trading of
commercial and industrial furniture & fixtures.
8…We are gaining market share in India and overseas markets
9…Consolidation in industry with smaller players are difficult to stay in market
10…(2021)Foraying into attractive plywood segment
We are expanding horizontally into the INR 25,000
crore plywood market, which we believe is a natural
progression of our laminate business. The organised
section of the markets has started seeing benefits of the
GST and recent e-way bill implementation, demanding
improved prices especially in the premium segment.
A greenfield project with an investment of INR 60 crore
is being setup at Manak Tabra, Haryana. The business
is being setup as a separate entity under our whollyowned subsidiary Stylam Panels Limited. It will be run as
an independent unit, while simultaneously leveraging
on our expertise in the plywood segment and our robust
distribution network. We envision to create a mark for
ourselves in the premium plywood market launching
innovative value-added products, in addition to catering
to the industrial commercial segment and mass
consumption market.
Disc…invested
This is my latest portiilo with buy and hold approach
4 Likes
there have been corp governance issues in the past…
i have read this article before…although i am not subscribed to moneylife anymore…
u can read if u have subscribed…
1 Like
Lighthouse Emerging India Investors,Limited has reduced the stake by 4.48% during the qtr which seems to be brought by Sixth Sense India opportunities. light house is shown as public share holder in screener…
1 Like
Some Scruttlebutt
I had talk with company’s marketing employee near my city.
As per him
1… company has recently started new dealership in various areas.He is also newly employed since 6 months.He has given names of new dealers of 4 districts under him
2…Company was in top 10 in domestic market but due to latest domestic focus,it is now at no 6.
Their focus is to be among top 3
3…Superior quality and among few company making anti finger print laminates
4…In some districts, dealers of century and greenlam have also made stylam available in enough stock
5…Company will start phenol production its own
I had also talk with one dealer who told that there was no marketing team for stylam in that perticular district but recently one week back marketing person has visited him for stylsm laminates
SO,I THINK THAT THEY HAVE STARTED DOMESTIC FOCUS BY LEVERAGING ON THEIR RECENTLY EXPANDED CAPACITY
Disc…invested and views may be biased and will stay invested
7 Likes
what’s makes the difference with the other plywood co’s, plz help me to identify the moat
MOAT
1…Strong brand recall in Europe – one of the world’s most quality conscious markets
2…Economy of scale
…Large scale of operation
≈Largest laminateproducing group in India with a production
capacity of over
14.3 million
laminates annually
3…Diversified products
=design excellence,
1,200+designs and
120+ texturesand finishes
=Multiple surfaces
available with high
gloss, metallic,
anti-bacterial, chalkboard,
fire and chemical
retardant, electrostatic,
magnetic, mirror and
translucent properties
=A wide range of
high-pressure
laminates, cubicle
boards and acrylic
solid surfaces
=We are capable of
designing laminates in a
range of sizes:
4…quality standards
5…implementation of advanced technology,
=We conduct
extensive research and development
to bring technologically advanced,
innovative products to delight our
discerning patrons in India and the
overseas markets.
6…Pan-India channel
partner network
=29+ years
of credibility in
the industry
7…Our unrelenting focus on value-added products enables us to sustain robust margins, despite increasing competitive intensity.
8…operating margin
=We exited the
year recording one of the best margins in a decade, which reflects
the growing share of value-added products in our overall sales
=On the other hand, changes in product mix supported by economies of scale and
operating efficiencies have helped us improve margins considerably.
= Our operating margin has
consistently averaged over 17% in a sector with high-competitive intensity,
…
GROWTH STRETAGY
A…Firstly, we will be
leveraging our expanded capacity which has a potential
of INR 1,200 crore p.a., strategically focusing on improving
our capacity utilisation to double our revenue by 2025.
B…Secondly, we will be concentrating on enhancing our
premium value-added product share to further improve
our margins.
C… Thirdly, we will be expanding our reach
and brand association, entering newer markets across
the globe and creating an expansive network across
India to cater to the growing demand.
D…Fourthly, having
created a mark for ourselves in the laminate segment,
we have decided to enter the plywood segment
anchoring on our strong industry presence in existing
business segments.
E… Fifthly, while we grow our topline,
we will judiciously remain focused on reducing our debt
to become debt-free, strengthening our margins and
balance sheet.
FUTURE GROWTH
2019/2020
1…Corian/solid acrylic surface
=Our entry into acrylic
solid surfaces presents a huge opportunity, going forward.
=The Company acquired Golden Chem-Tech Limited
2…Hot coating process
=Last year, the Company entered a new business vertical
of value-added laminates and came up with anti-finger
and high-gloss finishing on laminates through hot coating
process.
=Our Company is the only manufacturer to provide
such value-added finish on thin laminates. Customers
are satisfied with the finish and the product seems to be
gaining momentum now
3…Short cycle press
=Our Company has entered into new a segment and added
short cycle press for lamination of impregnated paper on
Medium Density Fibre (MDF) panels
=However,
during the testing of the plant certain teething issues
cropped up which were dealt efficiently, hence making it
commercially viable
4…Capacity expansion
=The Company expanded its production capacity from 11.0
Mn sheets to 14.3 Mn sheets per annum in the second
half of Q4 of FY20. However, due to nationwide lockdown,
the commercial production of the expanded capacity
commenced from May of FY21
5…Sell of property
=By the year end, the Company disposed of its investment
property, the proceeds of which were used in repayment
of debts.
=The funds realised were used in the debt repayment
hence the resultant savings in the interest cost is
expected to improve the bottom line of the company.
6…Company with a view to explore
more potential markets, incorporated a Wholly owned
subsidiary (WOS) named Stylam Asia-Pacific Pte. Limited in
Singapore on the September 16th, 2019. Howbeit, subsidiary
being in its inceptive phase has not yet commenced its
business operations.
7…During the year under review, the company has purchased
34% shares of Alca Vstyle Sdn Bhd.(Alca) Incorporated
in Malaysia. These shares were purchased from existing
shareholders. Alca is engaged in the business of trading of
commercial and industrial furniture & fixtures.
8…We are gaining market share in India and overseas markets
9…Consolidation in industry with smaller players are difficult to stay in market
10…(2021)Foraying into attractive plywood segment
We are expanding horizontally into the INR 25,000
crore plywood market, which we believe is a natural
progression of our laminate business. The organised
section of the markets has started seeing benefits of the
GST and recent e-way bill implementation, demanding
improved prices especially in the premium segment.
A greenfield project with an investment of INR 60 crore
is being setup at Manak Tabra, Haryana. The business
is being setup as a separate entity under our whollyowned subsidiary Stylam Panels Limited. It will be run as
an independent unit, while simultaneously leveraging
on our expertise in the plywood segment and our robust
distribution network. We envision to create a mark for
ourselves in the premium plywood market launching
innovative value-added products, in addition to catering
to the industrial commercial segment and mass
consumption market.
Disc …invested
8 Likes
Stylam Industries Q4 and FY22 concall:
-
There is no slowdown in export market irrespective to steep rises in costs. Domestic looks equally demand-driven too. 15% volume growth but 5% growth in terms of value growth but the management wasn’t able to understand the question whether there was a fall in realization or not. But later they mentioned it was because of product. (Personally feel management wasn’t confident in answering this).
-
There is no supply-side shortage in terms of sourcing RM. Price rise is staggered. Targeted run rate of 70-80 Crs per month is achievable. Demand for solid acrylic product is also picking up. Domestic Dealerships have been set up and growth is expected. They are looking to expand into Colombia, South America, only company attending an exhibition there.
-
Price hikes history - hasn’t been much more 4-5% and the process is still on-going. They don’t have detailed data about this, segmented into products and geographies. Domestic v/s export margins is around 10-15% with export being higher. In export market, they sell 60-70% of there brand itself while other is through OEMs but they still mention that the product is of Stylam. Except EBITDA, everything is going well. Currently not running on full capacity.
-
Revenue target for 2023 - hopeful to achieve 950 Crs. The start of this FY has been good for now. EBITDA will recover to 17-20%. (Management wasn’t himself giving guidance, the participant asking the question gave such range). The rise in RM prices and fall take time but management hasn’t experienced such a steep rise in last one year but they are happy with what results they have put out. 60-40 is the export and domestic mix but 5-10% domestic share will increase.
-
Domestic revenues (240 Crs currently) should increase by 50-100% since there is a gap in the market. Previously they weren’t focusing so much on domestic market but from 1st April 2022 they are, so there is good traction visible. A big team has been set up with an experienced manager for Acrylic panel business with stocks being sent to factories, for both export and domestic. Lamination business has order backlog.
-
Melamine is only 12-13% part of the whole laminates market. Backward integration is difficult and very capital intensive (1000 Crs). Plywood business has been temporarily put on hold and deferred till 2024 as there is a lot of competition in the space already. America export market looks really good for the whole business. Dividend policy will go on as usual.
-
Competition in acrylic is not as much and will take one-two year for some entrant to set up but they want competition to come in so that the market grows and we can provide Make in India products. 6 RDC are set up for domestic market with a team of 60-70 employees. South India is the biggest market, they are already well-settled in North. Next quarter will be the best case to give guidance for FY23. Freight costs are slowly falling down. 20-25% is the expected growth rate for export laminates. With war coming to end, Russia and Ukraine’s demand will also come in.
-
Competitors whose brand name is well-established but Stylam will take some time to build that name and then they’ll be able to become price maker rather than price taker. In some export markets they are the price makers due to brand visibility. Freight is currently operating like a cartel so it is difficult to predict the future prices. Domestic sales is around 150 sales employees. They have added Salesforce platform to track sales employee’s productivity (this request to measure was provided by one of the participants in the previous call and seems like they have taken it seriously). From the participant’s scuttlebutt, in Bangalore, Stylam’s visibility is increasing and revenue doubling from that city.
-
No capex in plans for now and next few years as well. Current capacity utilization is around 50-65% for laminates.
-
Melamine RM comes from Europe and Kraft paper is Domestic. Acrylic RM 80% is being imported. No possibility of taking price cuts, only hikes going ahead.
-
Variable price hikes have been taken in export market, average around 4-5%.
-
Market share from domestic market is being increased from both unorganized and organized players. Currently business focus is on Laminates and Acrylic.
-
Acrylic capacity would be 35,000 sheets per month, 300-400 crores in value terms. Acrylic would be an import-substitute product. Dealers for laminates are in range of 70-80 and are increasing day-by-day with focus on quality and quantity. Major states is Punjab & Karnataka.
-
Melamine RM cost accounts for around 10-11% and is now decreasing. Coal, kraft paper, phenol all of these have contributed to drop in EBITDA margins.
-
Earlier when Stylam wasn’t know, they were ready to supply it to any customer but now since their brand name is getting popular they are choosy about their customer list. The focus is on building brand name. They are now exporting to 70 countries (it was 60 countries in previous years). They have also implemented SAP software for bookkeeping and accounting.
8 Likes
Stylam Industries: Q1FY23 Results & Concall Summary
Highest quarterly revenues at 235 cr. with EBITDA margins have increased QoQ to 15% leading to a PAT of 21 cr. Exports recorded at 72% of total revenue (169 cr.) compared to the previous quarter (Q4FY22) at 61% and for the whole FY22 it stood at 64%. (Seems like the domestic expansion strategy hasn’t come to fruition yet). Long-term borrowings remain unchanged at 21 cr while short-term borrowings have increased to 73 cr (from 59 cr in FY22). They sold 2.7 million sheets in this quarter (1.8 million sheets in the same quarter of the previous year) and although they never mention their realizations per sheet, the average comes to Rs. 870 (Rs. 727 in the same quarter of the previous year). Working capital has improved to 75 days from 97 days which was in Q4FY22.
Vision 2025 is now more specific with respect to capacity utilization at 80% and further expansion by up to 40% through a 40 cr. investment (capex). Rest of the pointers remain the same QoQ.
Source: Investor Presentation (Q1FY23 and Q4FY22)
Concall:
-
Pritesh Chheda from Lucky Investment Managers (if I’m not wrong this is Ashish Kacholia sir investment firm). 3 to 4 cr revenue generated from Solid Surface product line. The jump in revenue is from both domestic & exports (but domestic has been stagnant). RM prices are softening and the effects on profits would be seen in coming months. EBITDA margins would jump back to 18-20%. Exports are being done on CIF basis but it’s variable according to freight charges.
-
Premium segments are seeing more demand in the export markets. People are doing more renovations worldwide (pent up demand of COVID years). Distributor & dealer network is set-up all over India and infrastructure is also ready of the same, due to jittery market the domestic sales have been stagnant. Organized part of the sector is growing day by day.
-
US side they are a little weak where they are paying more attention. Far East & EU have been major markets. This quarter’s revenues were not any kind of backlogs of the previous year. Exports will continue to flourish conditional to no further lockdowns. Domestic market is still undervalued and the same journey that they made for export market share will be taken for India. Other expenses included majorly ocean freights and this is reducing day by day. Currency impact hasn’t been much as it is being settled against the imports of RM.
-
Price hike during the quarter hasn’t been much and only unorganized players in domestic market have started reducing the prices. Solid surface business only amounts to a crore or two but will increase to 10 cr in coming quarters and up to 100 cr for FY23, as distributor network has been set up for domestic markets. Overall margin profile of the business will be better. 30% of top-line growth is maintained. Recession isn’t affecting the demand.
-
The effect of input cost is seen after a time lag of 2-3 months but definitely the gross margins would be better in the coming quarters. Capacity expansion would not land into directly increasing the quantity of sheets but would be quality and value-addition to the process. Value-wise (in terms of revenue) would be close to 30-40% increase.
-
Brand name of Stylam in export markets is getting recognized. Management does not want to put all eggs in one basket hence both domestic & exports would be the focus and not either one of those. We are price competitive in all of the export markets and very strong pricing power in EU.
-
The rise in export business would be consistent in the coming years. Domestic markets aren’t realizing the quality of Stylam although we are very known in export markets.
-
235*4 = 940 cr (annualized) but will be more than that (I’m hoping they would settle at 1000 cr). Solid surface is now available in 4 branches in Delhi, Kolkata, Bangalore and one more city. The new machine for solid surfaces has arrived and is placed only waiting for one part and would get operational in 2-3 months. India is importing more than 800 crores, Korea is exporting worldwide and hence Stylam is entering into it with their brand Granex instead of white-labeling for others for domestic market. We didn’t let go of any employees during COVID years and 20% margins would be achieved in the coming years.
-
We have confirmed orders from US for solid surfaces, just need to wait for 2-3 months for it to pick up. According to the capacity added for solid surfaces it can generate a sales of 400-500 cr. Margin profile for solid surfaces cannot be predicted as with volume increase and import-substitute RM from India is being sourced.15-20% EBITDA for solid surfaces. Margin expansion would come from increase in Contribution % due to decrease in RM prices which is yet to be seen in the financials. Total FY23 top-line would come around 1000 cr (conservative) given Q1 is a low base.
-
We were never focused on domestic before and Stylam is consisted of first generation entrepreneurs while other competitors are legacy businesses. If a company has international recognition, it would be a smooth process to gain domestic market share. It can be said that competitor’s are not getting export business or you can say they are not focused (best line so far that shows ultimate confidence in the brand they have build in export markets). India exported 2500 cr laminates in last year. There are more than 300 factories in the unorganized market. We are concentrating on building our brand and not acquiring other players or brands. No fund raising plans in future years and would be open to distributing the profits.
-
The capacity expansion would come online by end of this FY. We current plants and machinery we can go up to 1500 cr of revenues. Asset turns would depend on the type of products, machines, quality etc. Distribution network in India is strong across South (demand is also dominated by the South) and then North, West & East. Market rank is difficult to judge due to majority share held by unorganized but are in top 10 approx. and would further rise to top players.
Disc: Tracking position and would add more once it breaks the 1200 resistance level
8 Likes
Excerpts from 1QFY13 conference call
Rajesh Kumar Ravi: So, around Rs. 1,000 crores top line can be there, this is what you are implying on a conservative number?
Jagdish Gupta: Yes.
Rajesh Kumar Ravi: That is where almost a Rs. 1,000 crores versus Rs. 660 crores, you’re looking at (+50%) top line increase this year?
Jagdish Gupta: Your figures are more than me because…
Rajesh Kumar Ravi: No, just on the conservative side you’re targeting given that Q1 is a low base number?
Jagdish Gupta: I can’t answer much in this but you are right. Whatever calculation you are doing is correct.
So this means company is talking of Rs1000crs revenues in FY23 v/s Rs660crs in FY22. That is quite amazing
Moderator: We will move to the next question from the line of Mihir Dhami from Lucky Securities.
Mihir Dhami: The 40% capacity increase which you are going to do, how much time it will take to come on stream, in how much time will it come?
Jagdish Gupta: Within this financial year. It will come by end of this financial year.
Mihir Dhami: And in current plant, how much can we expand the capacity?
Jagdish Gupta: That already I told combining the two lines, we can go up to Rs.1,500 crores from this total operation.
Does this mean there is potential to expand revenues 50% again in FY24 v/s FY23?
Management has also guided EBITDA margins will go from 15% to 20% over time which means bottom line growth will be faster than topline growth.
Some of the big HNI investors who have bought Stylam over 850 -1150 are:
- Nikhil Vora of Sixth Sense
- Sunil Singhania of Abbakkus
Ashish Kacholia’s team has been attending the result conference calls, but not sure if they own any stake.
5 Likes
Good numbers. Improvement seen in OPM also as projected by the management earlier. The company is going on right track.
Disc. - Invested
1 Like
Positive results. Highest quarterly sales, operating profits and net profit. Extrapolating these two quarters to further more, the company is on track to cross 940 crores in annual sales. Hopefully the operating margins rise to COVID-levels that is 20-21%. Haven’t been able to read the concall transcript, if somebody could summarise it until then. Technically the stock is still facing resistance at the 1200 level
3 Likes
Stylam came out with good Q3 nos, with sales growing by 32% and PAT by 50%. Management has mentioned that with small capacity expansion of 40 cr., they can go upto 2000 cr. in sales. Acrylic revenues have also started ramping up with this quarter sales at 7.5 cr.
FY23Q3 concall
- Exports are growing better than industry due to new customer additions. They are confident growing sales by 15-20% in FY24 over 50% growth in FY23
- Currently operating at 75-80% utilization in laminates division. Even at similar utilization they can make higher revenues by selling more value added products. Currently, 5-10% of sales is coming from value added products
- Gross margins did not show much increase because of higher priced inventory, benefit should start flowing in now
- Higher finance costs were because of Euro debt (and Euro strengthening vs INR)
- Acrylic revenue was 7.5 cr. in Q3FY23. From current capacity, can do peak revenues of 400-500 cr.
- They get advanced payment in domestic acrylic business
- Peers in acrylic: LG, Du pont, Samsung
- Debtor days are high in domestic laminate division, expect reduction in debtor days as brand gets more established
- With a small 40 cr. expansion, their existing capacity can support sales of 2000 cr.
- 60-65% of their products are sold in own brand name, rest are OEM branded
Disclosure: Invested (position size here, bought shares in last-30 days)
15 Likes