Stylam Industries Limited (STYLAMIND.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Stylam Industries Limited Q3 FY '26 Earnings Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Anshika Patnaik. Thank you, and over to you.

On behalf of Systematix Institutional Equities, we welcome you all to the Q3 FY '26 Conference Call of Stylam Industries Limited. From the management side, we have Mr. Jagdish Gupta, Managing Director; Mr. Manit Gupta, Whole-Time Director; Mr. Kishan Nagpal, Chief Financial Officer. I'll now hand over the call to MD sir for his opening remarks, followed by the Q&A session. Over to you, sir.

Hello. Good afternoon, distinguished investors. It is both an honor and a privilege to welcome you to this investor meet. I am Jagdish Gupta, Managing Director of the company. Joining me: Manav Gupta, Executive Director of the company; Mr. Kishan Nagpal, Chief Financial Officer. On behalf of the 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 had a chance to review it Nevertheless, I would like to take a few minutes to walk you through the key financial highlights and strategic milestone that defined the quarter and 9 months ended on 31st December. Revenue growth quarter ended 31st December 2025, the company recorded a turnover of approximately INR 271 crores compared to INR 250.5 crores in the corresponding quarter of the previous year, registering a quarter-on-quarter growth of 6.45%. This performance reflects our sustained market expansion and ability to meet evolving customer requirements. For the 9-month period, the company achieved a turnover of approximately INR 846 crores as against INR 759 crores in the corresponding period previous year, reflecting a year-on-year growth of 11.38%. Quarter -- export performance quarter ended 31st, export turnover stood at INR 198 crores compared to INR 185 crores in Q3 '24-'25, registering a growth of 6.75%. Export amounting to 9 months ended 31st December, export amounting to approximately INR 617 crores against INR 543 crores in the corresponding 9-month period ended December 2024, reflecting a growth of 13.59%. Export continue to be a key driver of our overall performance, domestic performance. Quarter ended 31st December, domestic turnover increased to INR 72.89 crores from INR 68.97 crores in the corresponding year, reflecting a growth of 5.68%. Nine months ended domestic turnover rose to INR 229.5 crores compared to INR 217 crores in the corresponding period of previous year, registering a growth of approximately 6%. We are undertaking targeting initiative to further strengthening our domestic market presence and momentum going forward. Profitability, for the quarter ended December '25, our PAT margins improved at 16.97% compared to 11.95% in the corresponding period of previous year, primarily due to the reduction in [ hardboard context ] losses of INR 10.31 crores to INR 2.33 crores for 9-month period ended [ 2025 ] -- PAT margin improved to 13.18% against 12.22% in corresponding previous year. EBITDA margin -- despite raw material cost pressure, our EBITDA margin improved to 20.51% for the quarter ended December '25 compared to 18.07% in the corresponding quarter of the previous year. For the 9-month period December '25, EBITDA margin stood at 19.51% against 18.72% in the corresponding previous year. This improvement underscores our efficient sourcing practice and inventory management. I am pleased to reconfirm that company continue to remain net debt free, reflecting prudent financial management, strong internal growth and disciplined capital allocation. I would like to highlight our strategic partnership with AICA Kogyo of Japan. This investment reflects confidence in Stylam's business and long-term growth potential. Beyond capital, this partnership brings success. That's through global technology, product innovation and best manufacturing practice, which we believe will further strengthen our competitive position over time. Capacity expansion -- work on the capacity expansion, work on upcoming manufacturing facility is processing well and remain on track for commissioning by March 2026. This expansion will significantly enhance our production capacity, operational ability and product portfolio. Capital development -- total planned investment for this project stood approximately INR 320 crores, including GST, out of which approximately INR 227 crores has already been deployed. I am pleased to report that project is progressing within the approved guideline and budget. In conclusion, I would like to express my sincere appreciation to the Board of its continued support and guidance. I also acknowledge the dedication of our employees, the trust of our customers and the confidence of our shareholders, which together form the foundation of our sustained growth.

[Operator Instructions] The first question is from the line of Keshav from HDFC Securities.

Good to hear that promoter issue is behind. I want to get a sense on the new promoter, Kogyo, coming in the books. As you highlighted, your competition intensity, whatever competitiveness in the market will improve. So how can Kogyo help you to possibly speed up the growth? And now what would be the outlook on the domestic business? Because earlier, Manav sir was handling, now he's not part of the business. So who will be handling that business? And possibly, we are hopeful once you will handle this business, the growth will speed up. So what sort of new initiatives you are planning on the domestic side of the business? And lastly, now who will be -- just a follow-up on this. Lastly, now Kogyo coming up, whether they will be involved in day-to-day operations or not, and even in future?

No, no. Your question is 5, 6 question. It will be mix. Half, I will answer you and half Manav is sitting with me. He will look after -- he started looking after for the last 1 month, domestic market. First of all, with this -- Japan, what we will get? We will get both best technology, which is if we need, which they are using for Japan market only. We are very strong in export. So they are very strong in domestic Japan market. Their brand is 70%, 80% Japan market is with them domestically. Number 2, as far as their involvement is, they are our strategic partner only. And they have already mentioned in their public announcement in India as well as in Japan, that is available in their website that whole -- we will remain the promoter Director of the company long life. They are -- their company is a professional company. There are no promoter of that AICA company. So they have full trust on us. They -- for the last 5 years, they are looking after us. So this type of they have no involvement, except if we are going for a heavy expansion, we are now -- we have many, many new projects with them, then we need Board approval; otherwise, nothing. As far as domestic market is concerned, Manav will look after domestic market. Of course, I will be here. We already took over for the last one year -- one month, sorry, and losses which we are facing, the loss is reduced. Now Manit will tell you about that.

Keshav-ji, I think with the domestic market because it is -- it was handled by Manav since quite a few years, so it might take 1 to 2 quarters minimum to get it rectified. Yes, initially since last 1 month, we have already started controlling everything, reducing the manpower -- unwanted manpower. Many people are even joining us. There is -- another HOD has joined us in sales last week as well. So I would see -- you correctly said that this growth would be very drastically in a good speed, and we are hoping that in the next 2 to 3 years, we would achieve maybe among top 3 in India, what we are actually targeting for the domestic market. But it might take 1 to 2 quarters just to rectify what all had happened in the last 30 years.

Keshav-ji -- I think you can take…

So earlier Manav sir was handling domestic. So now it will be handled by home, whether Manit sir or Jagdish sir? Who will be…

It is the same thing. It will be professionally managed, either it is me or it's my father who's handling it. So I think it would be done by both of us. But again, it would be professionally managed.

When you have filed the press release, the Kogyo have the option to -- one, increase to 40%. Post that, they have the option to even get the majority in the company. So can you please elaborate more on the same? What sort of option -- they have to buy more stake?

No, no, I think there is no option. If you see, the option what they have given, it is between 40% to 53%, which means they are buying -- they have already bought Manav's share, which is 27% and then comes the open offer of 26%. So it is 27% plus 26% comes to 53%, which they are obliged to buy. It depends whether they get that number of shares or number of percentage from the market or not. So that is why it is minimum 40%. Their aim or agenda is just to take 40%. But if number of shares are tendered in the open offer, then they have to buy up to 53%, which is a clause.

Mr. Keshav, you can rejoin the queue as there are a number of participants waiting, please. The next question comes from the line of Dhruv Bajaj from GrowthSphere Ventures LLP.

So sir, I had a couple of questions, very basic one. So first is from AICA Kogyo's perspective, how do they intend to position and integrate this acquisition? Because this is a major chunk that they have acquired. So do they primarily view the India operation as a manufacturing hub for the global requirements, which will ultimately imply a greater focus on maybe white labeling and potentially lower margins or are due to transfer pricing policy? Or do they intend to actively nurture and scale the existing Stylam brand in both domestic as well as export markets?

I think firstly, Stylam brand name and AICA brand name are 2 separate companies. That is a term that Stylam brand name will always remain there for the next 20, 30, 40 years till the time we are there in the company. Secondly, I think that is still -- we have not discussed yet because they are still not a part of the company and the Board. We also don't know whether they would be getting all the products made in India and exported because they already have 7 to 8 manufacturing plants across the world. Secondly, they also have another Indian plant running in Rudrapur. So we still have no discussion over that particular point. Once they are on the Board, then I think all these discussion will start happening. At the moment, I think there is no discussions or anything about manufacturing. As brand is concerned, Stylam will always remain there and Stylam would be doing whatever they are doing for the export and domestic market for the growth of the company, which is Stylam Industries.

My major concern or at least a portion of that the market participants also had was that we were confused whether the Gupta family will exit this business completely or continue to be the partners given the nature of the agreement.

We are not exiting not even 1% to be honest. We are not interested to even sell 1%. Yes, as per the clause, if anything happens, we might have to give them some percentage. We know what company was doing and what company would be doing in the future. So I think it was just a family rift which actually finally like went over after 3, 4 years. So now we are quite positive for the entire market, whether it is domestic or…

Sir, if I understand correctly, so the other family where there was some rift or whatever you are saying, they have exited, whereas you guys will continue to be the owners and operators of this business?

So actually, they have exited the business. So it would be owned permanently by my father and myself and our team.

Sir, there were a lot of rumors regarding AICA's acquisition of Stylam for the past 2 years or so. So if I can understand from your end, like how did this deal originate? Like were there any plans or maybe you were also always -- the deal was from their end only?

Firstly, this was happening since last 4, 5 years. And this is not an acquisition, this is a strategic partner. So in that case, they were after our company since many years, whatever we were doing in the export market. But yes, they are also quite positive that what Stylam is doing, they will definitely grow better. I think that is their aim, I guess.

Sir, but do you feel that there might be some sort of point of interest? Or do you feel that the synergies will outweigh that? Like what kind of synergies are you expecting? Because we are a bit confused as in because they target the same market and how will this thing flow? Like, won't stop they us from going into certain markets? If you can provide more clarity on that, sir?

Nothing. First of all, they are not present in the Western market at all. Europe, North America, they are not at all present anywhere. Their major market is APAC region. Secondly, AICA itself is a very big brand and it's a very old brand name. Stylam is actually nothing in front of AICA, to be honest. So I think there is nothing -- no conflict at all. It is just like 2 big brands getting together. And if you talk about car automobile industry, there are only one owner having 2 or 3 multiple brands, but no one is actually -- they're actually competing in a healthy way. So that would be…

The next question comes from the line of Aditya Pal from MSA Capital Partners.

Great to see you, Manit, on the call. Thank you so much for resuming the concall again. Sir, we were expected to start the new plant by September 2025. And now we are saying March '26. Is there any delay in terms of the equipment that had to come?

No, no, no. Actually, the thing is last year, there is one modification by the Supreme Court that after 20,000 square meters you need EC. So we applied for the EC and there is no CI's in Haryana. So we have to apply to center, MoFE, Ministry of Environment and… So it delayed by 2, 3 months. Everything is online now. It will be operational by the end of March, definitely.

But all the equipment that were to come that we were importing, there's no delay, right?

They are under trial. Everything is in place.

Perfect. Sir, the business that we have, acrylic solid surfaces. So now -- and dumping duty, how are we thinking about it? Because we were quite positive on it, not just in the domestic market, but we were also looking at Taiwanese market.

To be honest, I think, firstly, for the domestic market, I think solid surface, it was all combined with laminates only. So it was again due to this family thing, we couldn't actually do anything in the domestic market. So that is why even after the antidumping duty, we didn't even sell sheet there in domestic because there was a rift. So actually, we used to go into the market, it would have been a problem to the HPL as well. So since last 1 month, solid surface is a part of HPL. So for us, each and every product now in export and domestic, we have been taking it separately since 1 month. That is why you will see the solid surface sales also going forward, maybe after one quarter, you'll see the sales for domestic separately as well as export separately.

Export also, this AICA is buying locally. This is -- they are buying acrylic. They are selling in Japan market, acrylic. So maybe -- I'm not sure -- they will buy from India also.

So Manit sir, is it fair to say that now that this large chunk of issue that we had is behind us, and now Stylam is back to the old ways of this momentum?

I think hopefully, yes, till the time [indiscernible] resigned from the company, maybe another 1 week, 10 days. So hopefully, everything 99.9%, everything is behind now.

Perfect. Kishan-ji, just one last question, a data keeping question. If I can get the split for the 9 months, which is laminates and for acrylic solid surfaces?

Nine months number?

Yes, sir.

[Foreign Language]

Q3 [Foreign Language].

Domestic is 12.31 and export 21.35. Total 32.67.

[Foreign Language]

Solid surface, number of shares sale 5.74, and amount is INR 4.28 crores.

The next question comes from the line of Ritesh Shah, an individual investor.

This is Ritesh calling from Investec. Firstly, congratulations on the transaction and good set of numbers. Sir, just to clarify, sir, [Foreign Language] AICA will be okay with 40% stake, subject to basically what happens in the open offer. And our intent is to retain maximum stake. Is that correct, sir?

Correct.

Perfect. That's very encouraging. Sir, second is [Foreign Language], there will be a large growth CapEx, which is there. So sir, how should we look at our capacity. [Foreign Language] what is the expansion? Like can we look to double our capacity? How should we look at it?

No, I think if you talk about capacity-wise in laminates in square meter -- square meter, it will be around 10 million to 12 million square meter a month, what we -- the capacity we would be having after the new plant comes in. Secondly, domestic [Foreign Language], it's a very huge market for each and every product. So that is where definitely export [Foreign Language], a huge scope, but domestic is one of -- it's the biggest market where we are targeting a lot. So we are hoping in the next 2 years that we would be able to utilize 80% plus or 85% plus capacity of the new plant.

Sir, [Foreign Language], any plans right now?

Actually in terms with laminates to be honest, [Foreign Language] after they coming on board, what all synergy comes together. But definitely, other products, what we are talking to multiple companies, [Foreign Language] due to this family issue, [Foreign Language]. There are 2 or 3 multiple plants, which we have already studied and discussed. So hopefully, we might be able to give some news in the next 2, 3 months about our expansion plans.

Wonderful, and last question…

Mr. Ritesh, sorry to interrupt. You can join the queue for the follow-up question as there are a number of participants waiting. Next question comes from the line of Chirag Shah from White Pine Investment Management.

[Foreign Language] it is 50% and tomorrow if it -- U.S.

I understand your question. Last week, Manit was in U.S.A. [indiscernible]. When there is a tariff, when there is anything unexpectable, everybody start U.S.A. also, they are not buying, they reduced buying. But now they are mentally prepared on the raw material also. Mr. Trump has put duty on raw material also, which they are importing from Europe or any other. So Manit will tell you what is the effect of this.

Chirag-ji, firstly, for Europe, I think the trade has happened. I think the import in Europe was 6.5%, which I think it will be 0% in the due course of time, [Foreign Language], I think, when the agreement signs. And for U.S., it is right now 50% as I was there in U.S. last week. So hopefully, by February onwards, they'll start reordering everything. They have actually reordered us everything, and it will start manufacturing for them. So they would be taking that duty in their cost.

Okay. So because initially, there was a fear that we will share some part of the duty.

Initially, when the duty was 10%, I think that time you were sharing some part, but with 50%, it is practically not possible for us. So they have also done their calculation that the entire U.S. market is increasing the prices. So that is the only option for them to take the duty in the cost.

They are hopeful also maybe it can 25% additional -- they are indicating in every newspaper day before yesterday also. It can reduce any time, maybe…

So we are not bearing that -- this is good news because there was a fear that [Foreign Language] 18% to 25%. This is good. Second on the EUFTA, 6.5% duty [Foreign Language] does it benefit us in any way in terms of competitiveness whether [Foreign Language].

Not really. Yes, 6.5% [Foreign Language]. I think [Foreign Language] even we are supplying major quantities going to Europe. That can be a positive sign for organized Indian players. European, we would be able to compete more with the European manufacturers. So honestly, everyone was in state that this would happen immediately, but this is not happening any time before early '27. So [Foreign Language] no one knows actually what will happen. It can benefit us to compete with the organized European players.

Sir, last question, if I can. So coming to the AICA, this is the Japanese partner that we have, [Foreign Language] domestic operations, is it fair to assume that even you would be looking at that merging into Stylam, so that there is no competitive intensity between both of you? Is it a fair assumption to take?

No. Chirag-ji, [Foreign Language]they have assessed the value of the company. They know me for the last 5 years [Foreign Language]. But one thing we know very well that company growth, everything will be in a different way after a few months. So we cannot comment on this thing. We can comment only on next -- surely within 2 months, we will have a special investor meet again, physically or virtually, then we will let you know. Now we can't comment anything. But we are quite hopeful that they will do…

Yes. Because I understand it is an underutilized plant, so we get excess, additional capacity via merger.

Maybe. Maybe. No comment.

The next question comes from the line of Viraj Parekh from Carnelian Asset Management.

Congrats, sir, on concluding the deal. Just a few questions. Sir, firstly, [Foreign Language] export volume growth for 9 months, if I'm not wrong, has been approximately 2%. So how are we looking at that market going ahead? Value growth has been 14%, yes, but volume growth pick up [Foreign Language] product mix has changed? Have we taken any kind of price hikes? Second, similar question to Manit, since [indiscernible] month you've been looking at the domestic market. And in your opening remarks, sir, you mentioned that you've reduced some expenses and removed unnecessary labor. Is there any scope -- domestic market margins were -- domestic segment margins were a little bit lower. And post rationalization, we see margins to improve. If you can share some light on this?

Viraj-ji, the first question about the volume and the -- definitely, yes, the volume has not increased much. Point #1 is U.S. Point #2 is worldwide multiple wars going in multiple areas. So still, if you see Middle East, whenever there is a war in any part of the world, I think there is a panic situation. That is why the volume didn't increase. The entire Middle East is fighting the entire Israel, Ukraine, every country. So that is one of the reasons for the volume, I would say, consistent volume or a very small growth in the volume in spite of the value increase. So there was no price reduction or there was no price increase. Yes, in some parts, we might have increased some prices, but not a very major decision done of volume on the prices. The second point for the domestic, which you were talking, because it's been just a month. We are just reducing the expenses, the unwanted expenses. And I would say the margin will improve, but it might take minimum 2 quarters because we have to -- we are looking in each and every region, each and every state. So we are adding more people. And in the next another one, 2 months, there will be more 100 more salespeople joining the team. So it might take 2 months to actually get better margins from there and get better realization per sheet.

Just a follow-up on export. I think [Foreign Language]capacity we're going to be putting was going to be primarily for an anchor customer based out of U.S. So just wanted to understand…

To be honest, that wasn't the correct information. We are putting this plant based on the market needs. There was nothing related to one particular customer. I think no company can be dependent on any one customer or one country. So that was a very false information given by someone from the management itself. Earlier, he used to visit Bombay, so I won't comment on that. But that plant has been put up with multiple sizes -- and some of the sizes no one has in India -- looking at the global market and as well as the Indian market as well.

Manit-ji, can you please share the view of ramping up this capacity from '27, '28? How do we look at it?

Sorry, can you repeat?

Our capacity, sir, would commission from March '26, the new line which we are setting?

Correct.

Can we understand the capacity ramp-up of this facility in terms of utilization, in terms of revenue, what we are seeking in '27?

Yes. Utilization-wise, we are targeting in the next 2 years, we would be able to achieve 75%, 80% plus capacity utilization. Revenue-wise, I think it would be adding around between INR 700 crores to INR 1,000 crores.

The next question comes from the line of Ajay Sharma, an individual investor.

I just wanted to check on the domestic versus export realization. I see that the domestic price is almost 50% lower than the export price. So I mean, for the new capacity, are we going to target domestic or exports?

Again, it is 70%, 80% is domestic with the new capacity because the sizes are not very common for the Indian domestic market. The realization of domestic market was very well known to everyone that it was on a very low side because we were selling all commodity products only, which we are changing and which would be changing, and it might take 2 quarters, which I've already told in the call earlier, which would increase the realization as well.

Secondly, I see that you have offered to sell 12% also to your Japanese partner in addition to the 27%, 28% being sold by the other party, wherein…

We are not selling anything. I think if you have -- please read that very carefully that it is -- there will be an open offer after 27%. If they get 13% from the market, we won't be selling anything. If they don't get anything shortfall, minus 40%, maybe 1%, 2%, that only would be going from our side. Even more -- yes, it depends how much shares are tendered in the open offer.

So they will be 40% in any case, right, because you will have to sell the balance in case they don't get anything, right?

Yes, correct. We have to sell the balance if they don't get the remaining 13% from the open offer.

You will be -- if we get 40%, then you will be 35%, is it?

No, no, no, not 35%, I think 27-point something. 28%, you can say.

So they end up getting more stake than you. So how do you run the company then? I'm just not very clear.

Mr. Ajay, sorry to interrupt. You need to follow up for the follow-up questions. The next question comes from the line of Sneha Talreja from Nuvama Wealth Management.

Just two questions from my end. Firstly, on the cost front, given that we've recently seen INR depreciation and commodity prices moving up, what is the impact that you are seeing on your margins at this point of time? Or are you able to easily pass through?

Sorry, we couldn't understand the question.

You must be importing a lot of paper, if I'm not wrong, and chemicals. Given the recent INR depreciation, what's the kind of cost pressure that you're seeing? And are you able to pass it on?

To be honest, for domestic, I really cannot comment because it's been just one month, we have started looking after this deal was announced. So we have no idea. Definitely, domestic, we are going for another price increase from 1st April. So we would be passing it in for the domestic market. For export market, it actually doesn't matter because it's a natural hedging for us.

Secondly, Jagdish-ji mentioned a couple of times that the talks with the Japanese partner has been on for the last 4 to 5 years. And we still are trying to figure out that what would be the synergies between both of you and AICA in terms of exports opportunity. Have you not heard anything from them that whether they are looking out for a manufacturing partner for themselves in India or they are looking at creating a brand itself in India, something that you must have heard over this period of 4 to 5 years from them?

Nothing at all. Because as of now, after the deal was announced, they cannot even discuss anything until the time they are on the board. So once the deal is done, I think then we would be sitting down and discussing. Again, their agenda is to grow AICA in a separate manner and Stylam in a separate manner. There is no discussions about their Indian plant at all yet. For exports, we have -- like nothing has been discussed. They were just after Stylam since quite a while now. And hopefully, after next month or maybe in the next call, we would be able to answer that question as well.

The next question comes from the line of Yash Tawani from Aamara Capital.

Just two, three questions I have. So first, just trying to understand that what is the maximum utilization that we can get from the existing capacity of 20 million that we have? That is first. Second, I'd like to understand what is the bifurcation do we have in terms of the HPL and the low-pressure laminates compared to the current volumes that we sell? And what is the margin difference between these two? Yes, this is all.

First of all, we are not producing low pressure. That is different, that is MDF. With low pressure is a different thing. We are producing only high-pressure laminate, HPL.

What is the maximum utilization we can take from the existing INR 20 million that we have?

Existing which we have -- we are already -- there is some combination like some compact laminates, some thin laminates. We are already utilizing almost 90%, 95% utilization.