Investec initiates coverage on Stylam Industries with buy call, sees 41% upside

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Stylam delivered the fastest revenue growth in exports/domestic businesses at 15/14 percent CAGR over FY19-24. Per Investec, this is a reflection of its wide product offerings, designs, distribution strategy.

While Stylam’s per unit revenue has lagged peers, it fares better on operating metrics, on the back of strict cost control such as A&P and employee costs.

Stylam recorded PAT CAGR of 30 percent CAGR over FY04-24, funding growth capex by internal accruals and deleveraging over time. Over the tenure, promoters increased their stake to 54.6 percent in FY24 from 43 percent in FY04.

"The firm’s incremental capex via de-bottlenecking/brownfield expansions bodes well for incremental RoCE. With regard to its foray into acrylic, even at conservative margins, we expect healthy return ratios and see upside risk to our estimates on right execution with further upside if tariffs stand imposed," added the brokerage.

According to Investec, the company could record 19 percent EBITDA CAGR over FY24-26E.

Stylam Industries shares have gained around 15 percent during the past year, as against a 25 percent rise in the frontline Nifty 50 index.

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