Hold Century Plyboard Ltd For Target Rs. 775 - Prabhudas Liladhar Capital Ltd
Healthy Margin Outlook Despite Recent Pressures
CPBI has guided revenue growth of 10%/20%/20%/40% in FY26 across its Plywood/Laminate/MDF/PB segments with expected EBITDA margin of 12- 14%/single digit/15%/low single digit for Plywood/Laminate/MDF/PB. We believe Plywood performance will continue with healthy volume growth and better realizations as company took a price hike of 2% in Q1FY26 and improvement in laminates and MDF segments. CPBI aims to reach a turnover of Rs120bn by FY31. We expect overall revenue/EBITDA/PAT CAGR of 13.1%/29.5%/61.7% with Plywood/Laminate/MDF volume CAGR of 11.1%/14.9%/19.1%. We downward revise Century Plyboards (CPBI) FY26E/FY27E earnings by 3.6%/5.3% and downgrade our rating to ‘HOLD’ from ‘BUY’ with TP of Rs 775 (Earlier 806), valuing at 35x FY27E.
Revenues up 13.0% YoY, PAT down 53.6% YoY: Rev. up 13.0% YoY to Rs12.0bn (PLe: Rs12.2bn). Plywood/Laminate/MDF/Particle boards (contributed 56% /14.2%/22.6%/2.7%) revenue at Rs 6.7bn/1.7bn/2.7bn/0.3bn (+17.9%/6.4%/+68.3%/-12.4% YoY), was above of our est. of Rs 6.7bn/1.8bn/2.8bn/0.4bn respectively. GM expanded by ~10bps YoY to 46.8%, (PLe:49.5%). EBITDA was Rs1.3bn (PLe: Rs1.5bn) down 9.3% YoY. EBITDA margin stood at 11.2% contracting 280bps YoY (PLe: 12.4%) due to higher other expenses. EBITDA margin of Plywood/Laminate/MDF/Particle board was 15.1%/1.0%/12.2%/5.4%(~+310bps/-950bps/-430bps/-1440bps YoY). PBT decline by 32.3% YoY to Rs817mn (PLe: Rs 1.1bn). PAT stood at Rs466mn (down 53.6% YoY, PLe: Rs 879mn).
Concall highlights: 1) The management has guided Plywood/Laminate/MDF/PB sales growth at 10%/20%/20%/40% with EBITDA margin of 12-14%/single digit/15%/low single digit% in FY26. 2) CPBI is targeting a turnover of Rs120bn by FY31, indicating strong long-term growth ambitions and expansion plans. 3) Plywood currently has a capacity of 340k CBM, company is expected to add 48- 50k CBM each in FY26/FY27. 4) In the Plywood segment, the company took a 2% price hike under the Century brand in Q1FY26. 5) In the MDF segment, the company has commenced exports from its new plant to Middle Eastern countries; however, it is witnessing significant pricing pressure in the international markets. 6) In Q4FY25, timber prices were Rs6.7/kg in the North and Rs6.3/kg in the South. The company expects a 5–10% decline in timber costs in Q1FY26. 7) Badvel facility of Laminate and MDF segment company reported utilization of 60%. 8) The new PB manufacturing facility in Tamil Nadu is expected to become operational in Q1FY26 and is expected to support EBITDA margin expansion, driven by improved cost efficiencies and lower production costs. 9) The Andhra Pradesh facility is scaling up operations and achieved EBITDA breakeven in Q4FY25. 10) The company has strengthened its Laminates business through GTM tweaks, a focused sales team, and a refreshed product catalog. New product categories and digital tools are aiding both domestic and export growth. The Badvel plant recorded its highest-ever monthly turnover, with exports expected to improve further in FY26. 11) The company expects to achieve 50% capacity utilization at the new particle board plant in H2FY26, aiming for a substantial ramp-up in FY27. The break-even point is expected once it reaches at 60% utilization.
Above views are of the author and not of the website kindly read disclaimer
