Greenply Industries Ltd : Steady performance in plywood, Gabon to witness headwinds. Maintain BUY - Yes Securities
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Buy Greenply Industries Ltd For Target Rs.224
Steady performance in plywood, Gabon to witness headwinds. Maintain BUY!
Result Synopsis
Greenply Industries Ltd (GPL) reported better than expected numbers in Q2FY23 wherein revenue grew by 14.4%YoY & 9%QoQ, driven by volume growth of 7%YoY & 6%QoQ coupled with realization growth of 6%YoY & 2.5%QoQ. During the quarter, company commenced their Sandila facility which supported company’s volume growth. EBITDA margins came in at 9.9% as compared to 11.5%/8.8% in Q2FY22/Q1FY23 respectively. Going ahead, with healthy traction in real?estate segment, demand for GPL is likely to remain strong. Moreover, with newly commissioned Sandila unit & upcoming plywood facility in Hapur (by Q4FY23) along with Bareilly?Unit2 (from Q3FY23) getting operational, GPL is expected to report volume growth of 12%CAGR over FY22?FY24E. However, Gabon biz (12% of consolidated revenue) is expected to witness sharp decline in revenue owing to on? going crisis in Europe which constitutes 60% of Gabon’s biz & as on Sept’22 end, company has “Zero?Orders” from Europe. Owing to this, Gabon is likely to report operational loss for H2FY23.
We continue to remain positive on company’s growth & expect newer capacities to drive the plywood growth in coming years. Additionally, GPL’s upcoming MDF capacity (expected to commence operations from Q4FY23) should accelerate the growth momentum. Hence, we expect Revenue/EBITDA/PAT growth of 21%/32%/27% respectively over FY22?FY24E. We continue to value the company at P/E(x) of 18x on FY24E EPS of Rs12.4 & reiterate our BUY rating on the stock.
Result Highlights
* Revenue for the quarter stood at Rs4.94Bn(Vs our est of Rs4.02Bn), reporting a growth of 14%YoY & 9%QoQ. Standalone revenue stood at Rs4.32Bn, growth of 15.3%YoY & 9%QoQ. GMELs revenue grew by 5%QoQ & remained flat as against Q2FY22 to Rs589Mn. Standalone volumes reported a 7%YoY & 6%QoQ growth to 17msqm & average realizations stood at Rs248 Vs Rs233/Rs242 in Q2FY22/Q1FY23 respectively. GMELs sales volumes stood at 13,936cbm, registering a growth of 17%YoY & 6%QoQ.
* EBITDA margins came in at 9.9% (est. 8.1%) as compared to 11.5%/8.8% in Q2FY22/Q1FY23 respectively. Standalone EBITDA margins came in at 9.8% Vs 12.2%/9.4% in Q2FY22/Q1FY23 respectively. GMELs operating margins stood at 10% as against 10.7%/13.1% in Q2FY22/Q1FY23 respectively.
* Absolute EBITDA stood at Rs489Mn, reporting a growth of 22%QoQ & remained flat as compared to Q2FY22. PAT stood at Rs236Mn, registering a growth of 14%QoQ & degrowth of 26%YoY
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