Shares of Stylam Industries are likely to remain in focus after HDFC Securities upgraded the stock to a ‘Buy’ rating from ‘Add’ and increased its target price to Rs 3,775, valuing the company at 30 times its estimated March 2028 earnings.
The brokerage said governance concerns surrounding the company have largely been resolved following the exit of one promoter group. As a result, HDFC Securities expects a valuation re-rating, with the stock's valuation multiple potentially expanding to 30x from 20x earlier.
Another key trigger highlighted by the brokerage is Stylam Industries' partnership with Japan-based Aica Kogyo. While the strategic alliance is viewed positively, HDFC Securities noted that potential synergy benefits have not yet been factored into its estimates as the acquisition of the full 40% stake is still pending.
The brokerage expects the laminates business to deliver strong growth in FY27, with revenue projected to rise 20-25% year-on-year. Growth is expected to be supported by upcoming plant commissioning, while the acrylic segment is anticipated to scale up significantly from a relatively low base.
HDFC Securities also highlighted the company's brownfield laminate expansion project involving capital expenditure of approximately Rs 330 crore. The project has been deferred to mid-July 2026 due to environmental clearance requirements but is estimated to carry a revenue potential of around Rs 1,000 crore.
On the domestic front, the brokerage expects business conditions to improve from the first quarter of FY27, with the full impact of corrective measures likely to be visible by October 2026.
The note also pointed to chemical cost pressures arising from ongoing Middle East tensions. However, the brokerage believes the impact is being partially mitigated through price hikes, although complete cost pass-through remains challenging compared with European peers.