Buy Century Plyboards Ltd For Target Rs.685 - Yes Securities
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Result Synopsis
Century Plyboards Ltd (CBPI), registered decent revenue growth of 7%YoY & 9%QoQ to Rs9.65Bn. Plywood biz (59% revenue), grew by 19%YoY & 18%QoQ, Laminates (17% of biz), registered muted sequential growth & declined by 5.8%YoY. MDF (17% of revenue), declined 3%QoQ & remained flattish YoY. Particle boards segment declined by 20%YoY & 3%QoQ.
Margins were a big beat Vs our estimates, which came in at 17% as compared to 17.8%/14.6% in Q4FY22/Q3FY23 respectively, largely owing to better than expected margins in Plywood biz which stood at 16% Vs 15%/12.2% in Q4FY22/Q3FY23 respectively. MDF segment margins also expanded sequentially to 27% while laminates & particle boards margins sequentially declined by 130bps & 227bps respectively over similar period.
Management guided for volume growth of 13%/25%/30%/flattish for Plywood/Laminates/MDF/Particle Boards & revenue growth of 15%/25%/30%/flatnegative for Plywood/Laminates/MDF/Particle Boards. EBITDA margins should come in at 12-14%/12-14%/20-25%/20% for Plywood/Laminates/MDF/Particle Boards.
We believe overall Revenue/EBITDA/PAT to grow by 15%/20%/11% over FY23- FY25E. EBITDA margins should improve gradually to 16.6%/16.7% in FY24E/FY25E. At CMP, the company trades at P/E(x) of 30x/27x on FY24E/FY25E EPS of Rs19.0/21.4. We continue to value the company at P/E(x) of 32x on FY25E EPS & arrive at a target price of Rs685. Hence, we retain our BUY rating to the stock.
Result Highlights
* Revenue stood at Rs9.65Bn, a growth of 7%YoY & 9%QoQ (7% above our est)
* EBITDA margins came in at 17% (Vs est of 15%) as compared to 17.8%/14.6% in Q4FY22/Q3FY23 respectively. Absolute EBITDA grew by 2%YoY & 27%QoQ to Rs1.64Bn.
* Net profit stood at Rs1.14Bn, growth of 29%YoY & 39%QoQ. Segmental:
* Plywood: Revenue (59% of revenue) stood at Rs5.66Bn, a growth of 19%YoY & 18%QoQ. Plywood volumes increased by 12.4%YoY & 12.2%QoQ. ASP stood at Rs57,640/cbm Vs Rs54,436/Rs54,945 in Q4FY22/Q3FY23 respectively. EBITDA margins for the segment came in at 16% Vs 15%/12% in Q4FY22/Q3FY23 respectively.
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