Unlisted Shares

Merino is a major manufacturer of decorative laminates, with five plants and a global presence in 80+ countries across six continents, including France, Greece, Italy, Mexico, Russia, and others. The company is well-established in key Indian regions and exports to 81 nations.

Network - With a turnover exceeding US$250 mn, Merino has evolved into a global market leader, supported by a strong network of 15,000+ retailers and 5,000+ employees.

Product Portfolio - The company has a portfolio of 10,000+ diverse designs, Textures, colors, and finishes, producing 215 lakhs laminate sheets per annum making it one of the largest in India.

Major Involvements - The company had significant engagements, supplying its products for major landmarks like the NM Stadium in Ahmedabad (the world's largest stadium) and the Statue of Unity (the tallest statue globally). Additionally, the company offers products and solutions for the stadium constructed for the FIFA Qatar World Cup.

Financials -In FY23, the company experienced a 25% year-on-year (y-o-y) increase in revenue, with a 13% average increase over the past five years. However, there was an 11% decline in net profit for FY23, whereas it has declined by -0.5% over the past five years.

Investment Thesis- The company's revenue surged by 25% in FY23, maintaining a consistent growth rate of 13% over the past 5 years, aligning with the industry average. However, its profitability witnessed a 10% decline, with PBT margins dropping from 10% in FY22 to 8% in FY23, and PAT margins falling from 8% to 5% in the same period due to heightened expenses aimed at reducing fossil fuel dependence and promoting renewable energy usage.

After conducting a thorough analysis and calculations, it became apparent that the company is fairly valued compared to peers like Greenlam Industries and Rushil Decor. The relative valuation showed a P/E multiple of 36.5x, which is in line with the industry median of 36.5x. Following detailed computations, the intrinsic value of the company was determined to be Rs. 3,600 per share. The company is in the expansion phase and expected to do great business in FY24, however, due to declined profits in FY23, we have kept the rating neutral