Add Century Plyboards Ltd For Target Rs.439 - Yes Securities
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Our view
* Century Plyboards LTD (CPL)’s results were below our estimates. The performance was impacted due to regional lockdowns caused by 2nd wave of COVID‐19. Volumes across segments reported a substantial degrowth wherein plywood/laminates/MDFs registered 45%/41%/31% sequential decline. Going ahead, with opening of economy and real estate demand picking up, demand for wood panel products is also coming back.
* CPL’s Hoshiarpur MDF capex has been delayed and will be operational by H1FY23E. Moreover, company’s south MDF plant has also been deferred on account delay in approvals caused by lockdowns. Owing to the delay in MDF plant we have revised our revenue growth for MDFs to 23.4% CAGR over FY21‐FY243.
* For plywood & laminates we expect volume growth of 14% & 13% over FY21‐ FY23E respectively. In value terms we reckon, Plywood/Laminates to report 15.5%/16% CAGR over similar period. Overall Revenue/EBITDA/PAT should increase by 16%/20%/26% over FY21‐FY24E.
Valuation:
At CMP, CPL is trading at 23.6x its FY24E EPS of Rs17.6. We continue to value the company at 25x its FY24E EPS, arriving at a target price of Rs439 (previous Rs459). Hence, we maintain our ADD rating on the stock. Management stated that they will come up with a 3‐year growth plan in Q2FY22, depending on which the stock will come under re‐rating.
Result Highlights
* Volumes: Plywood volumes came in at 42,754 CBM reporting a 45% sequential decline. Laminates volumes stood at 1.15 Mn sheets, degrowth of 41% q/q. Company’s MDF division also registered 31% volume decline as compared to Q4FY21 by reporting 31,836 CBM sales.
* Realizations: Company’s plywood realizations improved by 5.5%y/y & 2% q/q to Rs49,589/CBM. Laminates avg selling price came in at Rs734/sheet reporting a 2% sequential decline. MDFs realizations increased by 10% q/q & 18% y/y to Rs28,571/CBM.
* Sales: Total sales stood at Rs4,575 Mn reporting a decline of 38.6 q/q. Plywood and laminates which forms +70% of total sales, reported a sequential degrowth of 43%/42.5% respectively. MDF segments revenue came in at Rs910 Mn, a degrowth of 23.5% q/q.
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