Buy Greenply Industries Ltd For Target Rs. 240 - Yes Securities
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
Our view
* Greenply Industries Ltd (GIL) announced its foray into Medium Density Fiber (MDFs). Company will set‐up 800cbm/day capacity at Vadodara by incurring total capex of Rs5.48Bn. With plant expected to begin commercial operations from March’23, we reckon MDF to operate at ~50% utilization in its first year of full operations i.e FY24.
* We believe that Plywood will continue to remain company’s flagship product, which should report volume growth of 16% CAGR over FY21‐FY24 and revenue growth of 17% over similar period on the back of sharp revival in real‐estate industry coupled with higher demand for branded plywoods. GIL’s total revenue are expected to grow by 21% CAGR over FY21‐FY24E to Rs20.9 Bn
* With input cost stabilizing and better utilizations from new plywood unit, operational margins of plywood are expected to expand. We believe plywood EBITDA margins to come in at 12%/12.7% in FY23E/FY24E respectively. Company’s overall EBITDA are likely to report 35% CAGR over FY21‐FY24E.
Valuation:
AT CMP, GIL is trading at 13.7x its FY24E EPS of Rs14. We continue to value the company at 17x on FY23E EPS arriving at a target price of Rs240/share‐ indicating an upside of 24%. Hence, we maintain our “BUY” rating on the stock.
Result Highlights
* Volumes: Company reported sales of 8.92msqm in Q1FY22, a growth of 88.6% y/y but a decline of 43.7% q/q. (below our estimates of 11msqm). Utilizations came in at 69% Vs 36%/145% in Q1FY21/Q4FY21 respectively.
* Sales stood at Rs2,608 Mn reporting a 96.5% growth y/y but a 34.3% decline q/q. Realization for Q1FY22 improved to Rs235/sqm from Rs222/sqm in previous quarter. Greenply standalone sales came in at Rs2,127 (40.6% sequential decline) Mn and Gabon sales stood at Rs474 Mn (27% q/q growth)
* EBITDA margins came in at 5.1% Vs our expectations of 8%. Operational margins contracted sharply from 11.5% in Q4FY21. EBITDA stood at Rs132 Mn (‐71% q/q) and as compared to loss of Rs28 Mn reported in Q1FY21.
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
