Stylam Industries (SYIL), one of the top four laminate manufacturers in India, has delivered multi-bagger returns to its investors. The company holds around 8% of the overall market share. It stands as the second largest exporter of laminates in India, with exports accounting for nearly two-thirds of its total revenue.

Since March 2023, the company’s shares have gained 110%. Keeping in mind the recent capacity expansion and favorable industry dynamics, domestic brokerage firm Equirus Securities has predicted a rise in stock prices.

The brokerage said the company has consolidated its position globally over the years. It says the company has emerged as a key player in India’s laminate industry, contributing 19 percent to the country’s overall laminate exports.

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From FY17 to FY24, India’s laminate exports witnessed strong growth, achieving a CAGR of 14% and 32 billion by FY24. Despite the increase in market participants, the brokerage notes that the company has been able to increase its market share from 16% to 19% during the period, on account of a commendable 17% CAGR in export revenues, compared to others in the sector. Leaving organized players behind

Key export markets

The brokerage emphasizes the company’s significant international growth, expanding its presence from 60 countries in FY18 to over 80 countries by FY24. The key markets of Europe, Middle East, Far East and North America collectively contributed 90% of the company’s export revenue in FY23.

This geographical diversification not only boosted revenue but also protected SYIL from fluctuating freight costs, as the company primarily operates on a CIF basis, passing on the additional costs to the customer.

In FY23, SYIL embarked on an ambitious strategy to explore new markets and expand its business horizons, participating in international exhibitions in Dubai, Germany, Atlanta and Bogota. This proactive approach underscored SYIL’s ​​commitment to global expansion and market diversification.

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Strategic expansion

To meet the growing export demands, SYIL has given the green light to set up a new laminate plant adjacent to its existing facility at Manak Tabara, Haryana. According to brokerage estimates, the plant could potentially double SYIL’s ​​revenue. 8 billion in peak consumption over the next 4-5 years.

The new plant will focus on manufacturing value-added products (VAP), target high-growth export markets, and expand its customer base among new original equipment manufacturer (OEM) clients.

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Although the domestic laminate industry is fragmented with several unorganized players, industry experts predict stability in the long term. The brokerage added that the top five players are expected to significantly consolidate their market share, reduce pricing pressure and create an enabling environment for organized players like SYIL to grow. will

Domestic market share

Equirus believes that the domestic market (one-third of SYIL’s ​​total revenue) will continue to witness healthy growth over the next 2 years due to strong momentum in real estate sales and continued growth in construction material consumption of late. – 3 years.

However, due to the commissioning of the new brownfield laminate plant for exports by 3QFY25, the brokerage expects a marginal decline in SYIL’s ​​domestic share after FY26E.

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In light of these bullish factors, the brokerage has initiated coverage on the stock with a ‘Buy’ rating and set a target price. 2,489 per piece, marking an increase of 21 percent from the stock’s previous closing price. 2,061.

Finally, with a strong base in international markets, strategic expansion of production capacity and a proactive market strategy, the company is well positioned to take advantage of emerging opportunities and consolidate its leadership in the global laminate industry.

Disclaimer: The opinions and recommendations expressed in this article are those of individual analysts. They do not represent the views of the mint. We advise investors to consult certified experts before making any investment decision.

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