ICICI Direct Assigns Buy Rating to Stylam Industries with ₹4,000 Target

Stylam Industries, a well-known player in decorative laminates and premium surface solutions, is poised for a new growth phase following a significant capacity expansion. Indian brokerage firm ICICI Direct has started coverage on the stock with a buy rating and set a price target of ₹4,000, indicating an upside potential of about 21% from its last close of ₹3,314.

The valuation is based on a price-to-earnings multiple of 31 times estimated earnings per share for fiscal year 2028, with a 12-month outlook. The company's recent commercial production launch at its Manak Tabra facility forms the cornerstone of this optimistic forecast.

The Manak Tabra plant, with a capacity of 52.5 million square meters, began operations in September 2026 after an investment of approximately ₹334 crore. Initially, the facility is expected to run at 25-30% utilization in the fiscal year 2027 and deliver revenue close to ₹300 crore. Management anticipates that as utilization improves over the next two to three years, the plant could add between ₹700 crore and ₹1,000 crore annually to Stylam's top line.

This capacity boost is set to support growth across international markets, including North America, Europe, and the Middle East, while also catering to rising demand for premium surfaces in India. ICICI Direct emphasized the role of this expansion as a key earnings driver, alongside pricing strategies and improved capacity utilization.

Stylam's financial health remains robust, with a net debt-free status and ample liquidity. The company primarily financed the Manak Tabra project through internal accruals, providing flexibility to manage working capital needs, raw material price fluctuations, and the plant's gradual ramp-up.

A notable development enhancing Stylam's investment appeal is the entry of Japanese materials firm Aica Kogyo into the promoter group. Aica acquired a 27.1% stake from previous promoters in February 2026, increasing it to 40% through an open offer valued at around ₹1,525 crore. This partnership could unlock opportunities in technological collaboration, product innovation, manufacturing processes, and access to international markets, although these synergies depend on future execution.

ICICI Direct projects Stylam's revenues to grow by 21.8% in FY27 and 17% in FY28, driven largely by the new production capacity and pricing measures. Revenue is forecasted to reach ₹1,375.5 crore in FY27 and ₹1,608.7 crore in FY28, up from ₹1,129.3 crore in FY26.

Profitability is also set to improve, with earnings before interest, taxes, depreciation, and amortization (EBITDA) expected to increase from ₹220.6 crore in FY26 to ₹261.6 crore in FY27 and ₹322.1 crore in FY28. Corresponding EBITDA margins are estimated at 19% and 20% for FY27 and FY28 respectively, factoring in initial underutilization and raw material price pressures before operating leverage gains take hold.

Net profit (PAT) forecasts stand at ₹175.1 crore for FY27 and ₹216.5 crore for FY28, compared to ₹149.9 crore in FY26. Adjusted earnings per share (EPS) are projected to rise from ₹88.4 in FY26 to ₹103.3 in FY27 and ₹127.7 in FY28. Return on capital employed (RoCE) and return on equity (RoE) are estimated at 23.3%/23.9% and 17.8%/18.2% respectively for FY27 and FY28.

Despite the positive outlook, ICICI Direct highlighted some risks, including raw material inflation, geopolitical uncertainties, foreign exchange volatility, potential supply chain disruptions, and execution challenges related to the capacity expansion.

Stylam Industries' share price has demonstrated strong long-term performance, having surged nearly 198% over five years. The stock reached a 52-week high of ₹4,160.25 in July 2026, though it has corrected by 7% over the past month. It has nonetheless delivered gains of 6.5% in three months, 52% in six months, and 93% over the last year.

With a sturdy balance sheet, growing international footprint, and strategic partnership with Aica Kogyo, Stylam appears well-positioned for sustained expansion in the decorative laminates sector. The commissioning of the Manak Tabra facility marks a significant milestone that could drive revenue and earnings growth in the coming years.

This outlook aligns with broader trends in the surface solutions market, where demand for premium and customized materials is increasing globally. Companies able to scale operations efficiently and innovate with new technologies are likely to capture greater market share.

Investors and market watchers will be closely monitoring Stylam’s progress on ramping up the new facility and how it navigates risks related to costs and global market conditions. For now, ICICI Direct’s initiation of coverage with a buy rating signals confidence in the company’s future prospects.

About the Author
Pranati Deva is a seasoned financial journalist with more than a decade of experience in covering markets and listed companies. She currently serves as Senior Sub Editor at LiveMint, focusing on real-time reporting and analysis of stock movements and macroeconomic trends. Pranati has worked with top Indian financial news platforms and holds degrees from Symbiosis Institute of Media and Communications and Hansraj College, University of Delhi.