Stylam Industries Limited (526951) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Q4 and FY '25 Earnings Conference Call of Stylam Industries Limited, hosted by Systematix Institutional Equities. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Ms. Anshika Patnaik from Systematix Institutional Equities. Thank you, and over to you, ma'am.

Thank you. On behalf of Systematix Institutional Equities, we welcome you all to Q4 F '25 conference Call of Stylam Industries Limited. From the management, we have Mr. Jagdish Rai Gupta, the Managing Director; and Mr. Kishan Nagpal, the Chief Financial Officer. I'll now hand over the call to the management for the opening remarks.

Sorry to interrupt, we cannot hear you clearly.

Am I clear now?

Yes, ma'am.

So from the management side, we have Mr. Jagdish Rai Gupta, the Managing Director; and Mr. Kishan Nagpal, the Chief Financial Officer. I'll now hand over the call to the management for their opening remarks, followed by the Q&A session. Over to you, sir.

Good afternoon, distinguished investors, analysts and stakeholders. It is both an honor and a privilege to welcome you to this investor meet. I'm Jagdish Gupta, Chairman and Managing Director of the company. Joining me Mr. Kishan Nagpal, Chief Financial Officer. On behalf of entire leadership team, I extend our sincere appreciation for your continued trust and support. The investor presentation has already been made available on NSE and BSE and company's official website. I hope you have already had a chance to review it. Nevertheless, I would take a few moments to walk you through the key financial highlights and strategic milestone that define the financial year '24-'25. Revenue growth, the company achieved a total turnover of INR 1,025 crores in year '24-'25, representing a year-to-year growth rate of 12% over INR 914 crores in financial year -- previous year. This growth reflects the strength of our market positioning and our responsiveness to evolving customers' needs. Export performance. Export contributed almost INR 731 crores up to -- from INR 611 crores in '23-'24, a remarkable increase of almost 19.6%. This strong performance underscores our growth, global footprint and competitiveness of our offering in domestic market. Our domestic revenue stood at INR 294.4 crores, approximately slightly lower than INR 303 crores in previous year, reflecting marginal decline of 3%. In quarter 4 '24-'25, the company posted a turnover of INR 265 crores, up from approximately INR 234 crores in the corresponding quarter last year. Our PAT margin of the year was 11.81% compared to 14% in previous year. This reduction was primarily driven by elevated raw material cost and the challenge the industry faced domestically. Our profit margin for Q4 is almost approximately 10.96%. Despite in factory pressures, our EBITDA margin stood at healthy 18.06%, down from 20.06% in '23-'24. Net debt status. I'm pleased to share that company remains net debt free. This is a direct result of our disciplined capital allocation, strong internal growth and prudent financial strategy, all of which provide us a good solid foundation for future investment. We have set up a new laminate press in our existing plant at Manak Tabra, which increased our production capacity by 800 to 900 metric ton per month. Capacity expansion, we are in alignment with our long-term growth strategy. Construction of our new manufacturing facility in progress well, it is on the track commissioning by September '25. This will significantly enhance our production capacity, operational flexibility and support. The total capital outlay for this project is INR 260 crores inclusive of GST, of which approximately INR 120 crores has already been deployed. I am pleased to report that the project is advancing on schedule and within the allocated budget. We continue to implement ESG principle into our operation, responsible governance, environment, stewardship and ethical conduct are not just compliance requirements for us, they are core value and our driven vision for substantial growth and stakeholders. While macroeconomic uncertainness and raw material costs, while at least may persist, we remain cautiously optimistic. Our strong fundamentals, upcoming capacity announcement and strategic focus position us well to grow in both domestic and international markets. We -- as we look to the future, we do so with a strong sense of purpose, clear road map and unwavering commitment to value creation. We thank you for your trust and valued support, and we look forward to meeting with you as we enter the next phase of our journey. Thank you very much with warm regards.

Shall we begin the question and answer session?

Yes, yes.

[Operator Instructions] The first question is from the line of Aditya Pal from [ MSA ].

Thank you to the management for resuming the practice of having quarterly con calls. Sir, my first question would be that now that this entire new capacity is coming up, when do we start seeing -- because I understand that a few presses would have already come online in this new capacity. When do we start seeing the first leg of revenue growth coming from in terms of equipment.

It is delayed by 2, 3 months. So we put one new press in our existing plant, and we are running -- and from -- I think, from this month -- from next month, you will see some growth. But from September, middle of September or maximum end of September, we will start our full production in new plant.

Understood. And sir, when we are saying that full production will be started in the new plant means by, say, July and August that the pending INR 150 crores will be spent?

Sorry, actually, your voice is a little loudy.

Is it better now?

Yes, a little better, yes, yes, yes.

Yes. Sir, I was asking that when we are saying that from, say, September, end of September, the full-scale revenue will start from the new plant. So meaning that we will spend the INR 160 crores everything before the first half, the pending INR 160 crores in the CapEx?

Actually, plant is almost near full machinery under like you can say -- building is almost 80%, 90% complete. The installation of machine is going on. It will start definitely by end of September, but we don't know whether -- when we can get to the full capacity utilization, maybe 2 months, 3 months, 4 months because sizes are new, market is new. But something we will get in this financial year, we will get the growth sale -- growth in the sale, definitely.

And sir, the capacity -- the asset turnover that we were expecting, the revenue potential of this plant remains the same, right, that we were looking at to spend INR 250 crores and the revenue potential of this plant was INR 750 crores, INR 800 crores.

Minimum, yes, sure.

That will be there, right. And sir, just one last question. That is, if I look at your domestic revenue. Yes, so the realizations are at multiyear low. That is in FY '22, it was around about INR 615, INR 620 per sheet. Today, it is close to INR 472 in Q4 exit quarter. So is it more to do with the prices that is the product mix changing? Or is it more to do with that we are giving more margins to our distributors?

No, no, actually not something. I'm trying my best. You see we are almost #1 in the world in export market. Last week, we had an exhibition in Bangalore. Everyone in the world knows Stylam name. There are some family compulsions, unfortunately, I could not look after this domestic market. I'm trying my best that how can I be involved in this. We are hopeful that maybe this year, we will try that we can get some -- you are right. I am not fully -- Nagpal, our CFO will give the answer for this.

Domestic market is slightly low, has shown a negative margin decline of 3% this year.

The volume growth is there. My question is more to do with realization. That is what is the strategy that the management has adopted because realization per sheet [Foreign Language], so that has fallen from INR 615, INR 620-odd in FY '22 to INR 470 to INR 500 [Foreign Language].

[Foreign Language]

But there is one difference. In export market, we have expenses of only 0.5% maximum, less than 0.5%, whereas in domestic market, our expenses are more than 25%. So our realization is very less in domestic market due to some external factors, mostly are internal factors.

[Foreign Language], what is the capacity in terms of sheet [Foreign Language] will the pricing per sheet or pricing per kg that Kishan sir highlighted, will be more...

[Foreign Language] which is the first in India and third in the world. If we make one sheet in that press with compact laminate that is costing INR 15,000 one sheet and weight will be 200 kg, maybe 150 kg. So you cannot -- these things cannot be quantity based. If we go for 05 sheet, so many sheets. So this -- the best answer is how much profit we are earning, our industries, I think in India, our EBITDA margin is one of the best, number one. Even worldwide, if I have no exact data, in world also from export, I'm not asking again and again, not comparing with domestic at all, we are the best in the world even if you go for any big company. So I'm quite sure with new plant, different capacity, different sizes, totally greenfield plant.

Next question is from the line of Rudraksh Raheja from ithoughtpms PMS.

Sir, so my first question is we were under the impression that Wilsonart revenue has started kicking in. But if I look at last 3 quarters export numbers, they are sort of flat around INR 186 crores. So could you help us understand that?

Sorry, INR 186 crores, you mean last quarter?

Last 3 quarters, number is almost around that. If Wilsonart sales have started, sir, we should see some...

No, see we have already signed an NDA. We are going for the net sale. So the figure, it is total export and this every month, it is increasing. We have no much capacity in our old plant. For this reason, we are going for this expansion. The sale will increase...

Have we already started giving the material?

Last year, it was INR 106 crores.

Last year.

So you can see if the sale is in '23-'24, it was INR 600 crores something. Now it is INR 700 crores, increase of 20% means INR 120 crores, you can understand that. Still, we have no much capacity in our existing plant.

Okay. You said, sir, we have sold them INR 106 crores in last year.

Right.

So what was the number for this latest quarter [Foreign Language].

[Foreign Language] NDA signed with them. I cannot give -- I have no right figure with me, yes.

[Foreign Language] that is going to U.S. or Europe or both?

[Foreign Language]

[Foreign Language]

[Foreign Language] It is not ethical for me to disclose anything.

It's fine. It's under NDA...

We are trying. But I assure you sales will increase in coming few months.

[Foreign Language] Correct?

Yes. Correct. Correct. Absolutely correct.

[Foreign Language]

[Foreign Language] they suspended it.

Yes, sir, but beyond that, they are still agreeing to purchase our material.

Yes, yes, of course.

Okay. Good to hear that. And sir, are we in touch with any other global laminate players or white labeling players apart from Wilsonart.

[Foreign Language] Stylam is -- we are selling in our own brand name. U.S.A., we are selling in our brand name. Cambodia, many countries, we are selling in our own brand name. Indonesia, like this. So our sale is not only white label, not only OEM. [Foreign Language] if we are doing OEM also there we are doing for the last 20 -- 20 years. Netherlands, our customer has been selling our own brand name Stylam, so it is almost 60-40.

I understand. Sir, I'm trying to get if this Wilsonart deal opens new doors for us. Like have we cracked any other big client like Wilsonart? In other markets, sir, I think we supply to all...

Yes. We are trying for it. We will tell you in the next -- by next quarter, we will be more -- plant will come and we will see.

Okay, sir. Okay. And sir, what would be the sustainable growth rate for exports market?

[Foreign Language] 20% last year. We are expecting every year more than that, let's see. [Foreign Language] We are #20th. In export, we are almost #1, near to #1.

[Foreign Language]

Name any country where there is no presence of Stylam. We are present, where there is laminates going from India or from any part of the world, Stylam is present there. [Foreign Language] potato and dollar go to any country available, same thing, Stylam is available in every country.

Correct sir. [Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] Everything is same. No need of much increase of staff also, nothing.

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] I'm not looking after. My nephew Mr. Manav Gupta, we already mentioned in the -- that also, he is looking after and me and my son is looking after only export market. [Foreign Language], where I have no much answer.

Okay, sir. [Foreign Language]

[Foreign Language] We have no much dealer network. If we go for advertisement that will be wastage of money. But regional advertisement, we are already doing like glow sign, like painting that we are doing on city to city basis.

[Foreign Language]

[Foreign Language]

Sorry to interrupt Mr. Raheja, can you please follow the question queue again. Next question is from the line of Krupanshu from Thinqwise Wealth. [Operator Instructions]

[Foreign Language]

No, where you've seen this, we are 2% only, where you read this figure?

So basically, [Foreign Language].

[indiscernible]. Mr. Nagpal is here. We have only 2% difference, that is only due to last year...

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

There is international prices only.

[Foreign Language]

Next question is from the line of Viraj Parekh from Carnelian Asset Management.

A few questions. [Foreign Language]

Yes, yes, absolutely size. Actually we have a capacity -- still spare capacity in 4x8 size which is mostly selling in domestic market where you know we are very big. We are almost #30. For the 6x14, we are full capacity for the 2 month order, 3 months. 4x10, we have 3 month orders. That is the reason only. One press, we installed, new totally 5x12, I will not tell you the name of the buyer, but totally full. So the sizes problem, 4x8, we have two presses that are totally free, this is the reason. We are trying to get that order also, but we don't want to reduce the prices in export market too much.

[Foreign Language]

[Foreign Language] Nobody changes the supplier. 50%, 60% of our sales still is in the name of Stylam. Still, you go to U.K., you call U.K., you go to Netherlands, everybody knows the Stylam brand. So that not with us, with every company is going like this. Our customer is 20, 20-year-old customer, even who are buying from us as an OEM also in Germany, in other. In Singapore, we have 4 customers, 18, 20, 16-year association partnership with them. So main -- it is not with us almost every company in India.

[Foreign Language]

[Foreign Language] where is the one of the best stand in HPL industry that will say Stylam. [Foreign Language]. Domestic, people are asking me, whereas I have no much answer and you know -- I think you know personally what is the problem with us. So export, no issue at all. Sale will definitely increase more than 20% as like previous year.

[Foreign Language]

Minimum INR 1,200 Crores.

[Foreign Language]

First of all, we are still trying. Still, we are very new 3, 4 years only. Whereas in laminates, we are 32 years. Certainly, from this exhibition, I'm quite hopeful we are going very good partnership with very run acrylic producer also from Taiwan. Number two, we are even sale of -- even sale of INR 25 crores, INR 30 crores last year, we have no loss at all -- INR 20 crores, we have no loss at all. Yes, of course, EBITDA, as I mentioned, in domestic as well as in solid surface is, you can say, breakeven or less than breakeven. Even then you see our consolidated EBITDA is INR 18 crores. It means we are -- so this year, quite hopefully that this acrylic business will also grow.

[Foreign Language]

[Foreign Language]. We are exporting to him little bit. His name is world-class brand. [Foreign Language] We are quite hopeful that we will sign MOU with him, then it will automatically grow this business. But we are still -- we are not losing here.

[Foreign Language]

[Foreign Language] we are expecting maybe more than INR 100 crores.

[Foreign Language]

INR 19.5 crores, almost INR 20 crores, near to.

Next question is from the line of Tushar Raghatate from KamayaKya Wealth Management.

Sir, my question is on the acrylic surface business. Sir, as per your petition for the antidumping duty, I could see there is a competitor dual of 200,000 metric tons. Sir, considering the competitive scenario, are we confident because in the past, you mentioned that it's INR 600 crores or INR 500 crores, INR 600 crore market firstly. And also per for the document, it's a double-digit ROCE business. Sir, still we are getting the cost -- all the costs which we have incurred are totally front-loaded as of now. I just want to know, sir, from when we start getting some profitability in the acrylic business.

I already mentioned to Mr. Viraj Ji, you see that with this antidumping is no much effect. They just put only 2, 3 companies from China, and they leave one big company who is already dumping here. We are going for again representation. They have not put on that company. We are quite hopeful, much, much of, not quite hopeful from export market only, not from domestic market. We are going to tie up with some export company, manufacturing company like other people are buying from us, HPL OEM. Maybe they will take on OEM from us for acrylic. But -- there is more than less than 10 people working on the machine. It is fully automatic machine. So no expenses, nothing. So even at INR 20 crores, we are not at all loss.

Okay, you mean to say you are EBITDA positive on that?

100%. [Foreign Language] we put more time on laminates, 15 years to establish the brand. Here is only 3, 4 years. And it is totally new for India.

Got it. Sir, as per that document, sir, like for per kg, they have given the number, like from U.S.A., it's INR 316, from South Korea, it's INR 255 per kg. So I just wanted to know in terms of realization, what number are you targeting in the acrylic because those numbers are additional because you already have done the CapEx. On that front, sir, any ballpark number you are seeing?

Just hold on. He will -- please answer -- question again, Mr. Nagpal will answer you. I don't understand this.

Okay. Sir, as per the petition document sir, we have the rate per kg for acrylic. I think U.S.A. is 316 per kg. South Korea is near to INR 255 per kg. Sir, just wanted to know in terms of realization, like what is the number we are targeting for export in acrylic because sir, those will be the additional revenue contribution for the company.

[Foreign Language]

Sir, can you please repeat. I just couldn't get the number.

[Foreign Language]

I think you are asking something about this antidumping duty figures, correct? Hello?

He left the queue sir. Next question is from the line of Arpit Tapadia from IGE Family Office.

Congratulations on a good set of numbers. In your initial remarks, you have talked about raw material prices that has been on a top-ish note over the period. So what is the outlook going forward?

No, no, outlook, you see now sometime outlook is not very bad. It is like oil prices are going down, some chemicals going down, kraft paper India increasing a little bit. Then export market -- import also increasing, but we have no much effect due to our export. And we have more earning in dollars and euro. So we are getting so no much impact of that, import prices, if there is 3%, 4%, 5% plus, then we can get it from the currency appreciation.

Got it, and in terms of metric ton to metric ton expansion, currently, we are at, I think, 900, and after this September expansion, where we'll be landing up?

No, no, 900, we already done in one press last month, you can say. But which we are going to do, it will be 6,000 ton from September, increase in capacity.

So after September, total capacity shall be 6,000 MTP.

[Foreign Language] but we cannot get the sale in same October month total.

Correct, correct. I understand. And that is how you preempted my next question that how soon we expect the ramp-up? By March, we will be at optimum utilization or we will have to wait for some more time?

See, we are quite hopeful, but we cannot predict even 6 months. Suppose we get full capacity, then our turnover will be INR 2,000 crores, which is not possible. So it will gradually, new sizes, sizes where there is a demand in the export market, but quite hopeful, we will get very soon, next year surely.

What is your outlook over ramp-up that how the facility utilization will take place?

Actually, capacity utilization depends on 2 parts only, you see in domestic market is INR 20,000 crore market. Export market is only INR 2,000 crores, INR 3,000 something we have a very big share. So if fortunately, which I don't think we will achieve it, if we can get some market share, then capacity utilization can be very soon, that is a problem with us.

Got it. And what effort we are running off currently to expand our market share into domestic as well?

Sorry?

What effort it is going on from the company side for now to expand our wallet share in domestic market as well.

Actually, we are trying -- I told it 2, 3 people already, there is some compulsion, which I don't want, internal compulsions. For this reason, in domestic market, we are very weak from the day 1, where export we are increasing every day. But still, we are trying. I'm not looking after domestic market.

Next question is from the line of Keshav Lahoti from HDFC Securities.

[Foreign Language]

18% [Foreign Language] If we get something you know very well, if we can get something from domestic, then there is no problem at all. Our expenses are not increasing in overseas market. We have no much staff, only few people in export. Me and my son is traveling almost every month. So we are -- if we get something from domestic market, then we will definitely gain the same EBITDA. But it will not go much down surely due to export.

[Foreign Language]

[Foreign Language] We are fully booked for 2, 3, 4 months in all our bigger sizes presses in old plant. When it will start, we will immediately get some market share immediately, not market share is already with us, capacity utilization will be from the day 1, some, not full.

Next question is from the line of Atul [indiscernible], an individual investor.

[Foreign Language], it was the best quarter and the highest price ever. So [Foreign Language].

[Foreign Language]. Please again.

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] I'm not involved for some internal reason. Otherwise, why should I exit? If I exit company will go down. If somebody is ready to take, exit me, I will be happily exit.

[Foreign Language] is it second option or?

[Foreign Language] Many things I cannot disclose due to compulsions. Understand some of my problems. I cannot -- want to explain. I will explain you everything individually.

Next question is from the line of Raghav Mittal from Dhamma Capital.

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] They are preferring India than China #1. Then it comes to HPL, their first preference will be Stylam. But of course, we cannot cater everyone. If you go for percentage size, our percentage market is increasing every year from the total market.

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] Net it should be -- let it start within 3 months, then we will discuss in next quarter again with you.

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] There will be no much competition #1. [Foreign Language] There will not be any much financial expenses [Foreign Language]. Number 2, manpower cost. Only small manpower cost will much increase. [Foreign Language]

[Foreign Language]

[Foreign Language]

Next question is from the line of Swapnil Gupta from White Pine Investment Management Private Limited.

Sir, my question is regarding FY '25, there is an 8-day increase in both inventory days and receivable days, which has resulted in net...

Sorry, sorry, just hold on. I'll get Nagpal, he will reply you on financials.

Hello.

Sir, in FY '25, there is an 8-day increase in both inventory days and receivable days, which has resulted in our working capital days rising to 120 days from 107 days last year. So can you provide some insights for the reason behind this increase.

[Foreign Language]

Next question is from the line of Parth Bhavsar from Investec.

Sir, I had a few bookkeeping questions, one bookkeeping question to be very honest. So basically, I wanted to know -- sir, I wanted to know what is our volume, exports and domestic for this quarter and the same period last quarter.

Domestic value-wise?

Volume, volume.

Nagpal.

Could you please repeat?

Volume [Foreign Language] exports and domestic, and this quarter and the same period last quarter.

Volume data [Foreign Language]

[Foreign Language] volume data.

3.2 million sheets.

3.2 million sheets. [Foreign Language]

1.43 million domestic, 1.81 million export.

[Foreign Language]

[Foreign Language]

[Foreign Language]

Next question is from the line of Pritesh Chheda from Lucky.

[Foreign Language]

Sorry, sorry, again, please [Foreign Language].

Fixed cost [Foreign Language].

[Foreign Language]

[Foreign Language]

Fixed cost, INR 260 crores approximately.

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] same maintenance team, which is in our old plant adjoining number 1. Number 2, when there is a new plant there is no much expenses initially on the maintenance. Power, coal [Foreign Language] if it is running one, we are getting revenue. There will be expenses. There will be no such fixed expenses immediately. [Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

Yes. But it is adjourning to our old plant.

[Foreign Language]

8x4 we have already sufficient capacity. There is different sizes, 7x9, 6x14, 5x12, different sizes presses, big size, which we have enough order already.

[Foreign Language]

[Foreign Language]. We have already 2 presses. But we have -- this market is growing market for this size domestically as well as export market. So we have sufficient order for 3, 4 months already booked for quarter to quarter, 2 month.

[Foreign Language]

Yes, 7x9. It is third in the world, not in India only.

[Foreign Language]

[Foreign Language]

7x9 [Foreign Language]

[Foreign Language] one press.

[Foreign Language] putting one press. [Foreign Language]

Approximately INR 200 crores depending again on the sizes -- thickness, it will be INR 150 crores to INR 200 crores.

[Foreign Language]

[Foreign Language] There is very big market, coming up market means. And number 2, if we can utilize in 3 pieces also door size, 3x7, that is a very big market worldwide.

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] Many are buying, many are new also. They are still [indiscernible]. When we put our first press 4 years back 6x14, we were first in India. Now there will be 8 presses of this size. So market is when you go for any new particular size, initially, it takes time. After that, everyone go for this size.

[Foreign Language]

[Foreign Language] We have capacity in the small sizes where we are also looking after more volume in that market.

[Foreign Language]

[Foreign Language]

So there is some capacity, okay. And my last thing is [Foreign Language] to use the capacity.

[Foreign Language] we will achieve before the year you are mentioning. But I again mentioning, our problem is a domestic market problem. [Foreign Language]

[Foreign Language]

[Foreign Language] then it can be unfortunate. Otherwise, we will remain #1. Our growth rate will be very high. We are very optimistic and full faith in all your people support. Unfortunately, again, people are asking me domestic, my internal compulsion is forcing me, but that I have no answer for that. Export, I promise with you.

[Foreign Language]

[Foreign Language] definitely we will grow more.

Due to time constraints, the last question will be from the line of Mr. Golu Gupta, an individual investor.

Sir, I want to just understand about the domestic market scenario for laminate.

[Foreign Language] We are very weak in domestic market. We are going very fast in -- but still we are trying our best. Our total, we are worried. We are also optimistic [Foreign Language]. When we can be #1 in the world in best markets, not only Middle East or Gulf country or African country, we are selling best [Foreign Language] 47.63% share of export in Europe market is from Stylam. [Foreign Language]

[Foreign Language]

[Foreign Language]

Thank you. Ladies and gentlemen, that was the last question of the day. On behalf of Systematix Institutional Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Thanks. Thank you very much.

Thank you, sir.

Thank you madam. Thank you very much.