Stylam Industries (NSE:STYLAMIND) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Stylam Industries Limited q one f y twenty seven earnings conference call hosted by Systematics Shares and Stocks. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concerns. Should you need assistance during the conference call, please signal an operator by pressing star, press 0 on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to mister. Thank you, and over to you, ma'am. Thank you. On behalf of Systematics Institutional Equity, we welcome you all to the Q1 FY 'twenty seven conference call of Stylam Industries Limited.

0:49 From the management side, we have Mr. Satish Gupta, Managing Director Mr. Manid Gupta, Full Time Director Mr. Kishan Nagpal, chief financial officer. I'll now hand over the call to the management for their opening remarks followed by the q and a session. Over to you, sir. Good. I think we already submitted... We already mentioned it is a major to... Like, when you are on silent, the city in the first row one, mentioned that the total is $6.27. Hello?

1:53 Yes, sir. We can hear you. Yes. So it is already on the website. Only information that we submitted in the Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch tone telephone. If you wish to remove yourself from the question queue, you may press 2.

2:42 Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Praveen Pajaj from GrowthSphere Ventures. Please proceed. Yeah. So thank you so much for the opportunity., firstly, congratulations on a great set of results. You always thought that 20% EBITDA margin was a ceiling for you guys, but you guys even crossed that number in this particular quarter. So my first question was, sir, what causes margins spike beyond this 21% kind of range despite lower exports Q on Q business, like what's the sustainable margins once exports starts to ramp up for the opposing new CapEx coming live? Because we are unable to understand the exact margin trajectory of this type of business.

3:36 So it's looking right on that front. I think the margin would remain the same. I think that is why even when the new CapEx will start end of August. So we can expect the similar kind of margins, which is 19, 20% plus. Did we get some inventory in type of benefit in this particular quarter? Because we short up 20% kind of range that we maintained earlier. I think, sir, actually, the. Can you just check one? Just a moment, sir. Is it better now? Yeah. Yeah. Please. Yes. I mean, I was trying to understand, like, did we get... Receive some sort of inventory gain benefit in this particular quarter given the volatility in the wooden prices?

4:44 Perfect. Perfect. And, sir, in the... One of the previous calls, you did mention that we are operating a near full utilization, the customers are waiting for a new CapEx to come live. And since you've already guided that our new CapEx... Yeah. Sir, I had a couple of questions on that front. Firstly, how will the ramp up look like? Like, do we have some sort of POs beforehand which we can scale up gradually once the CapEx comes live, or will it be on a month on one basis, the customer will assess the demand and then give us orders? And second was on month basis only. So we will on month. Yes. In our industry that we made a few Yes. From my area. Plus, what we are looking at for the first year, we'll be able to 50% plus capacity utilization for the next half.

5:30 Sorry. Say, if I heard it correctly, you said 50% plus capacity utilization. Right? I mean, we want to be conservative rather than No. Fair. Fair. On the call. That's why we were saying 50% plus and the capacity Okay. Fair, sir. And, sir, my second question was that we mentioned in one of the previous calls that we will announce a major CapEx once ICA's stake sale or the stake control was over. And in the previous quarter, you mentioned that we will mention about the same in this current quarter. So any updates on that front considering brokerages are coming out with reports that Yeah. To be honest, we are actually evaluating the other options side by side. We had to, but I think we might delay for until next quarter. Because our first focus is just to start this plan, which is more important than than running and getting more CapEx done.

6:22 So that is what is... Once and is operated by end August, early September, definitely, we'll announce about our new case. Very nice, sir. But just to understand, directionally speaking, are we focusing more on this laminate segment for the newer Caprace, or we will expand in some other panel adjacency? Laminate for every company. It is not actually product going along. Because the remaining to be plywood was the MDFA in practical help us which would help us, actually, to strengthen which would help us strengthen the domestic market for this. Okay. Fair enough. So then we'll keep us will be focused more towards domestic market versus exports. Right? Correct.

7:08 Perfect, sir. Okay, sir. Thank you so much. All the best. Thank you. We take the next question from the line of Keshav Navoti from HDFC Securities. Please proceed. The congratulation on healthy set of margin. So firstly, sort of top line growth you are targeting? Because now the, you know, the commissioning of the plant is also delayed by a month to August. So August is the trial production or commercial production? Commercial production would be first or second. First of the first. Sorry. Missed your voice voice is not clearly audible. Commercial production will be September.

7:57 Understood. Got it. What sort of price hike you have taken in this quarter? And secondly, even in this quarter also, you know, sort of domestic revival, which we are looking in spite of price hikes, the growth still remains a low single digit. How should we see the, you domestic getting revised? Actually, I think we have discussed this in the last call also on that that really takes time to to revamp the United market. If something was not wrong, it was not correct for the last three years. I mean, no one can expect us to to do 100 in one quarter. That is where we... In the first quarter also, we... So that it might take two to three quarters to actually be have the entire domestic. That is why it is not about the price side. The entire restructuring is happening where we we we we have Okay.

9:00 Okay. Got it. Thank you. That's it. Thank you. We take the next question from the line of Resham Heta from GreenEdge Wealth. Please proceed. Yeah. Thank you. Congratulations, sir, for a very good set of numbers. So first question is, you know, he... You know, this plan commissioning has been getting delayed, I think, almost since November 2025. So are there any specific reasons and we have seen these delays in time lines multiple times. So is there a further risk that we are seeing from this August or September commercial production timeline to it getting pushed forward? And if you could talk about, like, what are the reasons for the same? And also in the same light, see, the reason for asking this question is I think we were expecting some 300 crores odd odd revenues from this new plant, you know, in the current financial year.

10:04 So if you could also, you know, comment on that. I think you're right. I think your... I'll answer the second question. Whatever you are expecting Right. Right.

10:57 Right. And and, you know, sir, how... I think you did answer to the previous participation participant in terms of the ramp up. So I think because your voice is stable, I missed that. Was it 30% ramp up in the first month or 50%? Yes. No, no, 30% ramp up for the entire new plant. And whatever figure you are saying, I think we are pretty hopeful that we will be able to achieve that from the. Okay. So 30% ramp up by the end of this financial year, right, for the new plant? Correct. Correct. So exit will be 30%. Okay. Get it. And... But despite by the value what you were saying, around $2.50 to 300 here, it would be really on the first month. Okay. So 300 crores, kind of $2.50 to 300 crores revenue we sorry?

11:50 Yeah. Correct. Sorry. $2.50 to 300. Yeah. Got it. Got it. And domestic business, we are kind of trying to turn that around and doing some restructuring. So if you could elaborate on what specific steps you all are taking in what areas, that would be very helpful. And I understand why the delivery or the turnaround of the domestic business may take time. I completely appreciate that. The steps are very simple. I think we are just restructuring the team, getting new people on board, getting that confidence in the market, which was not there for... Especially for the domestic market. In in export, we are doing at such numbers. Why not domestic? Whereas the entire industry getting extra partners, and getting the right team.

12:55 Got it. And, sir, on the inflation side, right, because now, again, we've seen that, you know, this resurgence in West Asia war. With that, what is happening on the input cost side? And to that effect, what are the kind of price hikes that we whatever price hikes we've taken in the past in the last couple of months, are they sustaining? Just some commentary there would be helpful. I don't know yet. The raw materials still remains the same condition. I think that whatever price that we have taken, it will remain intact. If there is a reduction in raw material, if the raw stuff, definitely, have to reverse the little bit. We don't think in that particular way right now. But if there is, we will update you on that.

13:42 Understood. And, sir, if I can squeeze in, like, maybe one or two more? Sorry? Can you repeat? If I can squeeze in one or two more questions? Go ahead, Ashish. Set it up to the moderator and you don't have a problem. Sure. Great. Thank you. And on the export side, so how are we seeing the demand shaping up? And as far as The U. S. Tariffs, they were supposed to be 15% effective July. So is that still 15% or we are still at 10%? No. As of now, it's 10%, but I think today morning, it's came on news that US is implementing because the 10% had to go 0% from 22% today. So I think now that they have re implemented that 10% Right. Right. And for our existing plant, it can still deliver this 15% kind of growth that we delivered in the first quarter, like the existing plant capacity or not really?

14:51 Yeah. Yeah. The existing plant capacity, whatever we did, there is still a slight... So the level we are able to do to talk about Lambda, we still have a Right. Right. Alright. Thank you so much, and best wishes. Thank you. We take the next question from the line of Singh from My Equity Share. Please proceed.

15:43 Yeah. Thanks a lot. Am I audible? Yes. Thank thank you. So for this new partner, I I saw exchange filing that they have taken 4040% shareholding, and they are in place now. So on ground level, how things are changing now? Like, we talked about the tech transfer for Japanese high pressure laminates and certain business initiatives such as sourcing acrylic solid purchases or any other new development which is happening on the ground? Nothing as of now because there will be no involvement from their side and they are... Then they are a strategy partner. And as of now, there's no discussions about export to them or anything. No. That's all.

16:30 Yeah. Okay. Yeah. So so that that helps. So are you expecting anything in, like, near term, three months, six months where things will start evolving further? Maybe. Yes. But but, again, we can involve in terms of technology transfer to India, but nothing in terms of daily day to day involvement of them because they are sitting in Japan, and that we quarter we just have a good engagement with to do that. The involvement would be just in terms of technology transfer once they are aligned with it. Okay. And what about the sourcing of acrylic solid surfaces from our side to their worldwide distribution. I I I missed your comment. Your voice is very, very feeble, I would say.

17:31 I think it is it is again given right now. The next fee will not. Okay, sir. And and the next question for this India import substitution, we are trying to do domestic sales and all. Right? I was seeing your latest investor presentation, and I see that we are stuck at this 300 crore of run rate in India for the last four years. And we are researching the domestic business and all. I was just wondering what is the right of when we have an Indian market because of which... Like, the way you mentioned, right, in couple of quarters, like, three onwards, we'll start seeing changes. So the supply chain or or the or the people who are already selling in the market, are already in place. So I was just wondering what we as a company will do different because of which we'll start seeing better numbers in coming times.

18:22 Are you talking about acrylic or you talking about laminates? Laminates in our domestic market. So laminates, you know, again, I think I answered this question. It's a immediate Okay, sir. I think I'm all set. Thank you, and wish you all the best. Thank you. Thank you.

19:08 We take the next question from the line of Pritesh from Nakae Investments. Please proceed. I would request mister Pratesh to unmute and then speak. Mister Pritesh, please let know that I'd speak. I would request Pritesh to rejoin the queue till then we'll proceed with the next question. We take the next question from the line of Rahul Singh, an individual investor. You may proceed. Yeah. Good morning, and thanks for the opportunity here.

19:55 I'm an individual shareholder with your company. I just have two questions. First thing is regarding the delay in the, you know, plant commissioning because in the last phone call, as far as I remember, if I remember correctly, mister Deepish Gupta had said that there were some issues with the environmental variances, which was then filtered out and the plant had to... Was supposed to be commissioned soon. Now this time, again, there is some delay, and the reason is now, I mean, family feuds. So I I request some clarity on the issue, like... Or if there is some other strategic reason because of which you cannot divert the final details, that is also understandable, but if you can share that. Also, question is regarding ICA partnership. And I believe that ICA has nominated some members on the board already.

20:44 So there must be some roadmap which must be visible to the growth of the company. So again, if you can share that, if there's not any static limitations to that, you can help us being in the service in your company, which can it give us some clarity on the issue. Sir, sorry, sir, but your voice is very stable. If you can... I I don't know if the mic position or something, but we are unable to hear you properly.

21:30 Hello? Good evening. Now now it's okay. Sorry to interrupt, sir. I would request you to please come closer to a device a bit and then speak. Like, can you hold can you hold the mic towards your mouth and then speak? Is it okay now? Yes, sir. It's okay, sir. Please. It Hello?

24:37 Okay, sir. And sir, one more thing, like, with this open offer thing, I cannot getting the full share what they wanted. There was supposed to be, you know, some uploading from your side to them. So if if that has I think you have not you have not gone through that portal. It is already more than one month. Hundred and forty five years. Correct, sir. So so, like now you again are going to increase your stake. What do you plan to do, sir? Are you going to increase your stake from the open market? Any any differential allotment plan, sir? Sorry to interrupt, mister Rahul.

25:42 I would request you to join back the queue as there are several participants waiting for their turn. Okay. Thank you. Thank you for the opportunity. Thanks, sir. Thank you so much. We take the next question from the line of, an individual investor. Please proceed. Thank you for the opportunity. I hope I'm audible and congratulations on a great set of numbers. So you mentioned that in the domestic market, we will see good change maybe from Q3 of FY 'twenty seven. So I just want to know how this will ramp up? And what will be the revenue share? What can we expect the revenue share maybe a tentative percentage? And also with the export share contracting, how can we expect the EBITDA margins to move as well? So this is my first question. I'll come back with my second question once we're done with this question.

26:39 I think the won't be any contraction in the export market at all. And again, q three onwards, we expect the numbers to be better. Again, they cannot be a massive kind of in Q3 either, but it would be ramping up slowly, fully as you will see that in the number of time. Understood, sir. Thank you. And also for my second question, on the new upcoming plant, before you had mentioned at a 35% to 40% capacity utilization revenue of about INR $3.50 crores to INR 400 crores, but... 25% to 30 no, we said 25 We Thank you.

27:58 We take the next question from the line of from Analytics. Please proceed. Hi, sir. Thank you for the opportunity. Congratulations to the entire STYLAM team. Sorry to interrupt, mister Yukanch. I would request you to please come closer to your device and then speak. Voice is coming a bit low. Is it better now? Much clear. Thank you for the opportunity, sir. Congratulations to the entire Stylam team on a great set of numbers. So most of the questions have already been answered, so I won't repeat them. Just one question on your domestic side. Like in the last con call, you were mentioning that you have taken certain price hikes.

28:45 So keeping that price hike in mind, if you could just share what was that price hike. And with the price hike, we don't see meaningful change in the top line year on year. So if you could just broadly explain that. And also, now with the improved metrics that you are putting in place, how would the EBITDA margin on the domestic side change? We understand that before the past issues baggage was there and the EBITDA margin on domestic side was lower. So going forward, how do you see those things changing? Again, not a very near sighted change I'm expecting from your answer, probably you can talk about your plan that you have. Got it, sir.

30:17 Sir, on the EBITDA margin side, if you could guide how that will be? No, I think we are looking at the active on calculating both the things separately. But it is difficult to calculate the margin for domestic and export, looking at the production, which is common, looking at some of the expenses, which are almost everything is common is besides the domestic marketing sales team, credit score and domestic. But I think the margins would kind of be the same. Got it, sir. And sir, on the ICAST partnership that you've been talking about and a lot of participants have several questions around it. So you said we will be taking care of the business, the operations, even the market development. And at max, we'll go for a tech transfer from them. Right? So this tech transfer will be related to the laminate product or any other product because I suppose there are Can be for anything. We can be can be be for anything.

31:15 And this was... This is nothing new. This was from day one only that they are just a strategic partner in the company being run by my father and myself. It would be a technology transfer can do any product. Fair enough, sir. That's it from my side, sir. I'll get back in the queue. Thank you and all the very best. Thank you. We take the next question from the line of Chirag Shah from White Pine Investment Management. Please proceed. Yes. Thanks for the opportunity, and congrats for the. Sir, my first set of questions in domestic business. So one, can you update where are we in the course session? And does it also mean we need to add more SKUs as well as adding more distributors or cover for region?

32:07 And by when do you expect the course correction will be over? It will take more another six months to twelve months, most of the work is done. Correct. I think you're right. Maybe from three to six months, adding more distributors, adding more partners in various markets. They used to be And We were actually not present in many of the states only. Okay. And does it also be more SKUs need to be added in the existing locations also? Sorry? Can you repeat? More SKUs at the Not Okay. And sir, second question is for CFO for the quarter, Is that there has been a margin improvement in the domestic business while revenue maybe is stagnating, but because when we look at the data, there is a significant improvement in various cost items.

33:28 So has domestic business seen... And can you quantify the delta change? Because Yeah. Yeah. I I cannot comment on the change, but, actually, we have stopped the losses which are happening in the domestic markets in many quarters. So you can see the cost has been reduced. Your voice is echoing comment I think that losses have been reduced. That is the only thing, which might be an improvement in the margin. Okay. On The U. S. Exports, anything you would like to share as an update in terms of traction or anything any update you would like to share on The U. S. Region exports?

34:20 So nothing to share as of now. We are supplying there. I think the tariff situation, no one knows actually about it, what is happening. But today morning, it was mentioned at 10%, continue before 10% earlier and that has been continued as of now. Yeah. So now I presume customers would be coming with orders. Right? Your orders for variety of reasons. Okay. So... But we are not Sorry to interrupt, mister Chirag. Yeah.

35:05 Could you please rejoin the queue as there are several participants waiting for their turn? Thank you so much. We take the next question from the line of Anup Parekh from Anandrathi Shares and Stockbrokers. Sir, can you give us some sense on what is the current cost of 10,000,000 and minimum in rupee per kg? Do you expect any further cost inflation on deco paper, craft paper or chemical engineering the It is not that the raw material then dropped down drastically.

36:06 You are really there. So the raw material might be slowly. It might take six to nine months to take that tomorrow. Okay. And how much price hike was taken in the domestic market in FY 'twenty seven? And do you expect to date? I'm sorry, sir, is the reason for 10% QOQ decline in the employee cost and also a sharp variation in the depreciation amount? So if you can give a sense on what would be the quarterly employee cost and depreciation amount post commissioning of the new laminate plant.

37:29 Hello? Hello? Yes, sir. I'm I'm... Are you are you talking... Asking what's employee cost? Yes. 10% QOQ reduction. So what would be the reason? Ma'am, I think your voice is not audible. I think you think 10% reduction, I still don't understand. Am I audible? Can you repeat your question? What is the reason for 10% CO2 decline in the employee cost and a sharp variation in the depreciation amount? And also, what would be the quarterly employee percent depreciation post commissioning of the new laminate plant?

39:56 Hello? Yes, ma'am. I think it's okay. Yes. Sir, last question, what is the proportion of our laminate revenue, which comes from U. S. And what portion comes from Middle East market? From Middle East market, U. S. And Middle East, both would be ten percent eight percent each.

40:43 Understood. Thank you. We take the next question from the line of Ankur Kumar from Alpha Capital. Sir, actually, your voice has been very difficult to understand. So my questions are mostly repeat. So I wanted to understand that you are saying this new capacity is going to come from September, and we expect INR300 crore type revenue from this plant in this year and next year around INR 600 to INR 700. Am I understanding it right, sir? And on depreciation correct. And on depreciation and MO and employee, can you please repeat what number you said, sir? I couldn't understand.

42:23 Hello? Am I okay, sir. But I I couldn't understand. Maybe you can upload transcript. I... I'll read through that, sir. Thank you. Okay. Okay. Thank you. We take the next question from the line of Rudraks Rohitra from iThought Financial Consulting. Please proceed. Yes. Thank you for the opportunity, sir. Just one question on the exports front. Could you help us understand which are the markets that are doing very well for us? And this is the highest quarterly exports we have ever done. And how do you see this going forward? Do we need more geographies?

43:08 Or will we generate more growth from the existing geographies? Got it. And there are no challenges in The U. S. And The Middle East as of now? Okay, sir. Thank you so much.

44:10 Thank you. Ladies and gentlemen, we take that as the last question for the day. So on behalf of Systematic Shares and Stocks Limited, that does conclude this conference. Thank you for joining us, and you may now disconnect your lines.