Rs 225 to Rs 1,570: This debt-free stock turned into a multibagger in three years; fell 3% today

Shares of multibagger Stylam Industries have turned into multibagger in three years. The stock of the laminates maker has rallied over 597% in the last three years. Stylam Industries stock, which closed at Rs 225 on August 10, 2020 rose to a high of Rs 1570 on the BSE on August 11, 2023, delivering 597.77% returns during the period. An amount of Rs 1 lakh invested in the shares of Stylam Industries three years ago would have turned into Rs 6.97 lakh today. In comparison, Sensex has risen 71.45 per cent during the period.    

 In the current session, Stylam Industries shares slipped 2.70% to an intraday low for Rs 1570 against the previous close of Rs 1613.65 on BSE. Market cap of the firm stood at Rs 2686.27 crore.           

In terms of technicals, the relative strength index (RSI) of Stylam Industries stock stands at 52.8, signaling it's trading neither in the oversold nor in the overbought zone. Stylam Industries shares have a beta of 0.4, indicating very low volatility in a year. The stock has risen 38.53% in one year and gained 41.42% since the beginning of this year. The share has climbed 39.17% in six months.   

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The company announced its Q1 earnings on August 7. 

Operating profit rose to Rs 41.8 crore in the June 2023 quarter against Rs 35.3 crore in the June 2022 quarter. Operating profit margins climbed to 18.51% in the last quarter against 15.03% in the June 2022 quarter. However, revenue slipped 3.82% to Rs 226.2 crore in Q1 against Rs 235.2 crore in the corresponding period of the preceding fiscal. Q1 consolidated net profit zoomed 32.38% to Rs 27.8 crore against a net profit of Rs 21 crore in the corresponding quarter last year. 

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The stock touched an all-time high of Rs 1788.70 on June 12, 2023 on BSE.  

Brokerage Systematix Institutional Equities has kept its target price unchanged at Rs 1976 post Q1 earnings. 

“Stylam Industries has been recording the fastest revenue and PAT growth among peers since the last decade. The company has strengthened its balance sheet by  steadily retiring debt and has turned debt-free,” said Systematix.   

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“Considering Q1 earnings, we  have  cut FY24E/25E revenue by  11%/15% while keeping EBITDA, PAT unchanged on  expectations of higher margins.  We now expect laminate-volume/revenue/EBITDA/PAT CAGR of 8%/14%/28%/32% over FY23-25E  (FY18-23: 12%/23%/26%/37%), with strong OCF, and RoCE (34%). We remain sanguine on Stylam Industries prospects. At the current market price, the stock trades at  an  attractive valuation of 16 times FY25E EPS of Rs 99. We thus maintain our BUY rating on the stock with an unchanged target price of Rs 1,976, based on 20x FY25 EP/E,” added Systematix Institutional Equities.   

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YES Securities has kept its target price of Rs 1767 unchanged for the firm post Q1 earnings. It has assigned an add rating to the stock.  

“We expect company’s Revenue/EBITDA/PAT to grow by 18%/24%/25% respectively over FY23-FY25E. Laminates volume/realization is likely to grow by 13%/1% respectively over similar period. The growth will largely be driven by expansion of SYIL’s presence in domestic markets coupled with steady demand in export markets. Improvement in ASP is expected due to growing share of value-added products. Incremental capacities (40% additional brownfield & greenfield expansion) will enable SYIL to cater the growing demand. We have cut our EPS estimates by 5% for FY24 due to subdued demand but we maintained our EPS estimate for FY25 of Rs 88. We continue to value the company at P/E(x) of 20 times on FY25 EPS & maintain our target price of Rs 1,767. Hence, we have assigned an ADD rating to the stock,” the brokerage said.  

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 About the Company        

 Stylam Industries is engaged in manufacturing of laminates, solid surface panels and allied products. The company’s products include high-pressure laminates, performance laminates (HPL), specialty laminates, exclusive surfaces, acrylic solid surfaces and compact laminates. Its high-pressure decorative laminates are available in a range of colors in solids and woodgrains designs, many evergreen and new texture finishes. Its performance laminates products include electrostatic dissipative laminates (ESD), chemical resistant laminates and fire retardant laminates.