Buy Greenpanel Industries Ltd For Target Rs.513 - Yes Securities
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Upgrade target price to Rs513, Reiterate BUY!
Our view
Greenpanel Industries Ltd (GIL) reported a strong set of numbers despite facing plant shutdown of 43days at their north location during Q3FY22. Higher MDF prices (43.7% YoY & 18.7% QoQ) cushioned the impact of volume decline. We reckon with debottleneck exercise company will be adding ~120,000cbm capacities, which will enable them to cater the incremental MDF demand over FY23‐FY24E. Company is confident that MDF prices are likely to sustain & they will continue to pass‐on the rise in input cost which will enable GIL to protect their operating margins. GIL is also in process of finalizing a capex plan which will largely be for a brownfield expansion at their Andhra Pradesh plant, gearing them for the next leg of growth. Hence, we reiterate our BUY rating on the stock by upgrading the target price to Rs513.
Result Highlights
* Revenue stood at Rs 4,244Mn (9% above our estimates), reporting a strong growth of 34% YoY. Though company had to take plant shutdowns in Q3FY22, which lead to volume decline of 12% QoQ‐ higher realizations of 43.7%YoY & 18.7%QoQ enabled the company to report strong revenue.
* EBITDA margins came in at 26.2% in Q3FY22 (better than our expectations of 25%) as compared to 26.8%/21.6% in Q2FY22/Q3FY21 respectively. Absolute EBITDA stood at Rs1,111 Mn reporting a growth of 62.4% YoY. MDF’s EBITDA margins came in at 30.5% Vs 31.5% in Q2FY22 & 23.9% in Q3FY21.
* Net profit stood at Rs631 Mn as compared to Rs305Mn/Rs671Mn in Q3FY21/Q2FY22 respectively.
* Net working capital days stood at 13‐days during Q3FY22, wherein receivable days came in at 8‐days & payables stood at 30‐days.
Valuation
GIL currently trades at21.5x/19x on FY23E/FY24E EPS of Rs20.8/Rs23.3 respectively. We expect company’s Revenue/EBITDA/PAT to grow by 21%/28%/60% CAGR over FY21‐FY24E with EBITDA margins likely to come in at 24%/23.6% during FY23E/FY24E respectively. We have re‐valued the company at 22x (earlier 18.5x) on FY24E EPS of Rs23.3, arriving at a target price of Rs513. Hence, we reiterate our BUY rating on the stock.
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