IGI Logo

Upgrade to BUY!

Our view and valuation

Century Plyboards Ltd (CPL) reported strong revenue growth of 21%YoY & 5.4%QoQ in Q4FY22 on account of healthy growth registered in Plywood, MDF & particle board division. Operating margins came in at 17.8% Vs 16.9%/17.6% in Q4FY21/Q3FY22 respectively. Company took price‐hikes to mitigate the rise in input cost, however the same was implemented with a lag‐impact. Going ahead, demand is expected to remain strong due to up‐tick in real‐estate segment coupled with shift in demand from unorganized to organized segment. We reckon CPL’s Plywood/Laminates/MDF/Particle boards division to report volume growth of 14%/15%/30%/15% over FY22‐FY24E & revenue growth of 15.5%/15%/30%/15% respectively over similar period. In near term, input cost inflation is likely to keep margins range‐bound & we believe company will continue to take necessary price hikes to pass‐on the higher RM cost. CPBL new capacities viz. Hoshiarpur & South’s MDF unit along with New laminates plant in south will cater the incremental demand and enable the company to register healthy growth over FY22‐FY24E.

Hence, we expect CPL’s Revenue/EBITDA/PAT to grow by 17%/18%/24% over FY22‐ FY24E with EBITDA margins are likely to remain range‐bound between 17‐18% over similar period. CPL will be funding its upcoming capex via internal accruals & hence balance sheet strength is also expected to remain strong. We continue to value the company at 32x on FY24E EPS of Rs21.8 (upgraded by 6%), arriving at a target price of Rs698 (previous Rs660). Hence, we upgrade our rating from ADD to BUY.

Result Highlights

* Revenue for the quarter stood at Rs9,011Mn, reporting a growth of 21%YoY & 5.4%QoQ. Revenue was in‐line with our estimate of Rs8,890Mn.

* EBITDA stood at Rs1,607Mn, a growth of 27.7%YoY & 7%QoQ, which was above our estimates owing to better than expected EBITDA margins which came in at 17.8% Vs 16.9%/17.6% in Q4FY21/Q3FY22. (Vs our estimate of 15%)

* Company reported Net Profit of Rs888Mn, registering a minimal growth of 2.1% YoY but a sequential degrowth of 5.5%. Net profit was lower on account of higher tax paid, Tax as%PBT for Q4FY22 came in at 38% Vs 24%/30% in Q4FY21/Q3FY22 respectively.

* Segmental Revenue: Plywood biz (53.5% of total revenue) reported sales of Rs4,825Mn, a growth of 19%YoY & 8.3%QoQ. Laminates (19.3% of revenue), registered a 13.5%YoY & 16.2%QoQ growth. MDF segment (18% of revenue) grew by 36.7%YoY but degrew by 9.4%QoQ to Rs1.627Mn. Particle boards revenue increased by 56.9%YoY & 12.3%QoQ to Rs470Mn.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632

Above views are of the author and not of the website kindly read disclaimer