Shares of Stylam Industries have gone up close to 55% since the start of the year, and analysts at HDFC Securities see the stock going further up, dubbing the small-cap stock as the fastest-growing laminate company in the country.
The Stylam Industries Analyst: Keshav Lahoti at HDFC Securities initiated coverage on the stock with a “buy” and a price target of ₹2,300. The target indicates an around 34% upside from the stock’s last closing price of ₹1,709.60.
The Stylam Industries Thesis: The brokerage firm in its research note said that it likes the company for its industry-leading growth and EBITDA margins, healthy balance sheet, and return ratio profile.
The analyst said that Stylam has been steadily increasing its market share in both domestic and export markets, and the brokerage firm expects this trend to continue. The brokerage noted that over the past five years (from FY18 to FY23), the company has demonstrated impressive growth with a revenue/EBITDA/PAT CAGR (Compound Annual Growth Rate) of 23/26/37% respectively.
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Currently, exports constitute two-thirds of Stylam’s total revenue. The company has established a robust export team and has achieved the status of India’s second-largest laminate exporter. It is also India’s largest laminate exporter to Europe, which is known for its quality-conscious market, the note added.
The brokerage estimates that Stylam is poised to achieve robust growth in the coming years. As per the firm, the company will grow at CAGRs (Compound Annual Growth Rates) of 15% for revenue, 23% for EBITDA, and 26% for PAT (Profit After Tax) during the period spanning from FY23 to FY26E.
The brokerage firm also added that the ₹2,300/share valuation is at a 35% discount to one of its largest competitors Greenlam Industries‘ valuation multiple.
Price Action: Stylam Industries’ share price was up 1.79% to trade at ₹1,740.20 in the mid-market hours of trading on Monday.
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