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Aims to hit Rs 50Bn topline by FY26!

Our view

Century Plyboards Ltd (CPBL) reported robust growth in Q2FY22 wherein Sales/EBITDA grew by 56%/85% YoY respectively. Company expects to achieve Rs50Bn revenue by FY26 on the back of woodpanel industry likely to grow in double digits and with formalization of industry, organized players are expected to outperform industry growth. Hence CPBL will undertake capex of Rs12.30Bn over next 5‐years wherein Rs8.5Bn will be spent for MDFs & Rs 1.6Bn/1.5Bn/0.70 for Plywoods/Laminates/Particle boards respectively (against Rs11.5Bn gross block created in past 35 years). Over FY21‐FY24, we reckon CPBL’s total sales to grow by 19% CAGR to Rs35.7Bn & EBITDA margins to come in at 18.3%/19.2%/18.8% in FY22E/FY23E/FY24E respectively. 

Result Highlights

* Sales for the quarter stood at Rs8,136 Mn, growth of 56%YoY & 78%QoQ. Plywood (55% of sales) reported 67%YoY & 95% QoQ growth, MDF & Laminates (36% of sales) registered 49%YoY & 63% QoQ growth.  

* EBITDA stood at Rs1,598 Mn reporting a growth of 85%YoY & 165%QoQ. EBITDA margins came in at 19.6% Vs 16.6%/13.2% in Q2FY21/Q1FY22 respectively.  

* Plywood EBIT margins came in at 14.9% Vs 12.4%/5% in Q2FY21/Q1FY22 respectively. Laminates segment reported 21.4% EBIT margins as compared to 11.2% in Q2FY21 and 13.6% in previous quarter. MDFs also registered superior EBIT margins of 30.3% as against 22.8%/23.3% in Q2FY21/Q1FY22 respectively.  

* Net profit stood at Rs994 Mn during the quarter Vs Rs503Mn in Q2FY21 and Rs311 Mn in previous quarter. Net profit margins came in at 12.2% Vs 9.6%/6.8% in Q2FY21/Q1FY22 respectively.  

Valuation

At CMP, CPBL is currently trading at rich valuations of 39x/33x on our FY23E/FY24E EPS of Rs17/20.4 respectively. Hence, though company is expected to report Revenue/EBITDA/PAT growth of 19%/26%/33% over FY21‐FY24‐ we have assigned a “REDUCE” rating (previous ADD) on the stock with a target price of Rs611.   

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