IGI Logo

Newer capacities to accelerate growth!

Result Synopsis

Greenlam Industries Ltd (GRLM) posted a decent topline growth of 15%YoY & 6%QoQ driven by 17%YoY & 10%QoQ volume growth in laminates biz (92% of topline). ASP for laminates came in at Rs1,008/sheet as compared to Rs1,012/Rs1,030 in Q4FY22/Q3FY23 respectively. Higher operating leverage & lower advertisement spends during Q4FY23 enabled company to register better than expected operating margins which came in at 13.9% Vs 11%/11% in Q4FY22/Q3FY23 respectively while laminates segments margins came in at 15.6% Vs 12.9%/12.4% in Q4FY22/Q3FY23 respectively. Veneers revenue increased by 7%YoY & declined by 5%QoQ, Wooden doors revenue declined by 20%YoY & 22%QoQ to Rs85Mn, Wooden floors topline declined by 8%YoY & 29%QoQ to Rs64Mn.

Inorder to cater the growing demand across woodpanel segment, GRLM is setting-up capacity for Plywood (commencement in June’23), Particle boards (commencing in Q4FY24) & expanding capacity in core biz of laminates by setting-up plant in Andhra Pradesh (commencement in Q2FY24). GRLM also expanded capacities of newly acquired Gujarat unit to 5.5mn sheets p.a, hence post all capex, the laminates capacity will be ~24.5mn sheets p.a. Total capex cost for company is Rs9.5Bn (incl all projects) & peak revenue from new facilities will be Rs15Bn (A/to of 1.6x).

Management guided for a 10-12% volume growth in laminates & overall 20-25% topline growth for FY24E with EBITDA margins similar to Q4FY23 levels. On balance sheet, net debt is likely to raise to Rs7-7.5Bn by FY24E.

New laminate capacity (South & Guj unit), Plywood unit & Particle board will accelerate GRLMs growth. Owing to healthy demand, GRLM entering new geographies & newer products, we expect Revenue/EBITDA/PAT growth of 22%/26%/19% over FY23-FY25E. At CMP, stock trades at 32.1x/25.2x on FY24E/FY25E EPS of Rs11/14. We continue to value the company at 25x on FY25E EPS arriving at a target price of Rs354. Hence, we maintain our NEUTRAL rating on the stock.

Result Highlights

* Revenue stood at Rs5.33Bn (in-line with est), reporting a growth of 15%YoY & 6%QoQ. Laminates (92% of biz) revenue stood at Rs4.91Bn, a growth of 16%YoY & 7%QoQ. Veneers & Other segment’s revenue increased by 7%YoY & declined by 5%QoQ to Rs422Mn.

* EBITDA margins came in at 13.9% (Vs est of 11%) as compared to 10.7%/10.9% in Q4FY22/Q3FY23 respectively. Laminates EBIT margins stood at 19% Vs 14.7%/16% in Q4FY22/Q3FY23 respectively. Veneers & other segment’s EBIT loss came in at Rs10.8Mn as against Rs43Mn/Rs21.3Mn in Q4FY22/Q3FY23 respectively. Absolute EBITDA increased by 49%YoY & 35%QoQ.

* Net profit stood at Rs461Mn, a growth of 81%YoY & 63%QoQ.

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