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Result Synopsis

Century Plyboards Ltd (CPBIL) registered highest ever quarterly revenue of Rs9.08Bn, registering a 11.7%YoY growth & benign 2% sequential growth. Company’s plywood division (53% of revenue), reported 9%YoY & 2.5%QoQ growth. Laminates (19% of revenue) revenue stood at Rs1.74Bn, a growth of 7.3%YoY & 7.5%QoQ. MDF biz (17% of revenue) reported a 28%YoY growth & remained flat as compared to previous quarter. Particle boards (5% of revenue) grew by 24%YoY & declined by 7.4%QoQ. Plywood & Laminates EBITDA margins improved sequentially from 10.5% & 12.9% to 14.1% & 16.8% respectively. However, MDF & Particle boards margins contracted by 810bps & 740bps QoQ owing to higher input cost & operating deleverage. CPBIL announced expansion into Particle Boards segment wherein company will set-up a 360,000cbm capacity (existing capacity of 75,000cbm is operating at 100% utilization as on Q2FY23) in Tamil Nadu with a capex of Rs5.5Bn which will be funded via internal accruals. This unit is likely to get operational from Q4FY25E, management expects peak revenue of Rs6Bn within 2.5-3years of commencing the plant.

Management reiterated their overall guidance of 20%YoY growth in FY23, with Plywood/Laminates/EMDF/Particle boards margins guidance of 13-15%/14- 16%/25%/25% respectively. We expect Revenue/EBITDA/PAT growth of 18%/19%/23% CAGR over FY22-FY24E. We continue to value the stock P/E(x) of 32x on FY24E EPS of Rs21.6, arriving at a target price of Rs691. Hence, we assign an ADD rating to the stock.

Result Highlights

* Revenue stood at Rs9.08Bn (better than expectations), reporting a 12%YoY growth & flattish growth QoQ.

* EBITDA margins came in at 13.5% (below estimates) as compared to 19.6%/16% in Q2FY22/Q1FY23 respectively. Absolute EBITDA stood at Rs1.23Bn, degrowth of 23%YoY & 14%QoQ.

* Net profit stood at Rs 945Mn, decline of 5%YoY & marginal 2%growth QoQ.

* Plywood revenue (53% of revenue) stood at Rs4.86Bn, up 9.3%YoY & 2.5% sequentially. Ply volumes increased by 2.5%YoY & flat QoQ. ASP came in at Rs55,465/Cbm, a 6.7%YoY & 3%QoQ growth. EBITDA margins came in at 14% as compared to 16%/10.5% in Q2FY22/Q1FY23 respectively.

* Laminates revenue (19% of revenue) stood at Rs1.74Bn, 7.3% growth YoY & 7.5% QoQ. Volumes remained flat YoY & increased by 4%QoQ to 1.93Mn sheets. ASP came in at Rs908/sheet as compared to Rs844/882 in Q2FY22/Q1FY23 respectively. EBITDA margins came in at 16.8% Vs 21.6%/12.9% in Q2FY22/Q1FY23 respectively.

* MDF sales (17% of revenue) grew by 28%YoY & remained flat QoQ to Rs1.56Bn. Volumes grew by 7.2%YoY while realizations increased by 19%YoY & 1%QoQ. MDF margins stood at 26.9% contracting from 36.1%/35% in Q2FY22/Q1FY23 respectively.

* Particle boards revenue (5% revenue), increased by 24%YoY & declined by 7.4%QoQ. Volumes degrew by 11%YoY & 7%QoQ. ASP came in at Rs24,675/cbm, up 33.6%YoY & 4%QoQ. EBITDA margins came in at 28.9% as against 26%/36.3% in Q2FY22/Q1FY23.

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