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Our View:

* Greenpanel reported stellar numbers for the quarter and it seems as if outperformance is the new normal for the company. Revenues stood at Rs 3,888 Mn (up by 63.5% y/y), which was 7% above our estimates. MDF division (78% of total revenue) reported humongous volume/revenue growth of 54.4%/70% y/y respectively. Plywood segment also registered very strong volume/revenue growth of 58%/65% y/y respectively.

* Company’s EBITDA margins continue to scale upwards as it stood at 25% for Q4FY21 (+588 bps y/y and +337 bps q/q) and was higher than our expectations of 22.6%. Accordingly, absolute EBITDA came in at Rs 970 Mn (+114% y/y and +42% q/q) and 18% ahead of our estimates. Net profit stood at Rs 565 mn vs Rs 76 mn in Q4FY20 and was 47% above our estimates.  

* Capacity utilization for MDF segment was 102% wherein, Uttarakhand plant operated at 96% & Andhra plant operated at 105% during Q4FY21. Plywood unit operated at 98% in Q4FY21.

* Company outperformed on EBITDA front primarily because of the significant operating leverage that the company is enjoying on the back of robust demand scenario. EBITDA margins of MDF segment stood at 28.6% during the quarter vs 22.4% in Q4FY20 while plywood margins stood at 15.5% vs 7.4% in Q4FY20.  

* We continue to remain bullish on the company on account of (i) rapid displacement of mid‐low end plywood segment by MDFs, (ii) growing trend of online furniture in India and (iii) replacement of imports by domestic players (imports ~18‐20% of total demand). Further, due to exceptional demand scenario, company would undertake de‐bottlenecking to increase its total capacity by 20% during FY22E.  

* Going ahead, we factor in revenue/EBITDA/PAT CAGR of 22%/35%/78% over FY21‐FY23E. Company reduced net debt to the tune of Rs 1.88 bn during FY21 and aims to further strengthen their balance sheet with deleveraging to sustain. We estimate net debt/EBITDA for Greenpanel to decline from 1.8x to 0.1x over FY21‐FY23E

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