Buy Greenply Industries Ltd For the Target Rs. 425 by Choice Broking Ltd
Outlook:
We forecast MTLM EPS to grow at a CAGR of 42.6% over FY25-28E, basis volume growth of 7%/8%/10%, and realization growth of 2% CAGR for Plywood segment, 15%/18%/19% volume growth and realization growth of 1.2%/3.0%/3.0% in FY26E/27E/28E for MDF segment and furniture JV revenue of INR 1,500Mn for FY28E.
Valuation:
We arrive at a 1-year forward TP of INR 425/share for MTLM. We now value MTLM on our PEG ratio based framework – we assign a PEG ratio of 1x on FY25-28E core EPS growth of 42.6%, which we believe is a conservative multiple. This valuation framework gives us the flexibility to assign a commensurate valuation multiple based on quantifiable earnings growth. We do a sanity check of our PEG ratio based TP using implied EV/EBITDA, P/BV, and P/E multiples. On our TP of INR 425, FY28E implied EVEBITDA/PB/PE (x) are 12.5x/3.8x/20.0x, which are reasonable in our view.
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