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Result Synopsis

Greenply Industries Ltd (GPIL), registered a muted quarter wherein Standalone biz reported a revenue of Rs4.05Bn, a growth of 8.6%YoY & decline of 7%QoQ. Plywood volumes were flat YoY & degrew by 6%QoQ on account of sluggish demand. ASP came in at Rs249/sqm in Q3FY23 as compared to Rs235/Rs248 in Q3FY22/Q2FY23 respectively. EBITDA margins came in at 10.4% as against 11%/10.6% in Q3FY22/Q2FY23 respectively. Management reiterated their 20%YoY growth guidance for FY23 & stated that company will aim to grow 10% annually in volume terms. Gabon biz continues to face turbulence owing to on?going crisis in Europe (key geography for subsidiary). Revenue stood at Rs230Mn, a decline of 52%YoY & 61%QoQ wherein volumes degrew by 59%YoY & 68%QoQ. EBITDA margins also contracted from 10% each in Q3FY22 & Q2FY23 to 1.3% in Q3FY23. Though orders from Europe are picking?up, Gabon biz is likely to remain under pressure in near?term. MDF plant is likely to commence trial runs from Q4FY23. Management aims to achieve a turnover of Rs3Bn at 40?45% utilization levels in Year?1 (i.e FY24E) & for the said fiscal, EBITDA margins are expected to come in at 15%. Being the only major capacity in western India, company aims to capture this market (~45% revenue at peak will be constituted from west) as GPIL is likely to benefit from lower logistic cost Vs peers. On manufacturing cost, timber cost is similar for GPIL Vs Northern manufacturers (Rs5?5.5/Kg) & company could save on chemical prices given that the plant is in proximity to Chemical manufacturers. We reckon, with steady growth in Plywood owing to healthy demand coupled with material contribution from MDF from next fiscal, GPIL is expected to witness robust growth over FY22?FY24E. We expect Revenue/EBITDA/PAT growth of 22%/33%/26% over FY22?FY24E & continue to value the company at P/E(x) of 18x on FY24E EPS. Hence, we maintain our BUY rating on the stock with a target price of Rs224

Result Highlights

* Revenue for the quarter stood at Rs4.28Bn (Vs our est of Rs4.38Bn), reporting a growth of 2%YoY but declined sequentially by 14%QoQ.

* EBITDA margins came in at 7.6% (est. 8.1%) as compared to 10.2%/7.6% in Q3FY22/Q2FY23 respectively. Absolute EBITDA stood at Rs325Mn, declined by 24%YoY & 33%QoQ.

* PAT stood at Rs360Mn (includes exceptional gain of Rs96Mn), up by 21%YoY & 53%QoQ

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