ICICI Securities research report on Greenply Industries
Greenply Industries (MTLM) reported consolidated revenue growth of 5.0% YoY in Q1FY24, with India plywood business growing 4.4% YoY while plywood volume grew 1.6% YoY (4-year CAGR of 4.7%) and realisation was up 2.9% YoY. Consolidated EBITDA margin contracted 258bps YoY to 6.3% due to EBITDA loss of INR 73mn in MDF segment (which commenced operations in May’23), while India plywood EBITDA margin was flat YoY (due to higher A&P spend despite gross margin expansion of 320bps YoY). Gabon operations margin shrank 710bps YoY due to high raw material costs (gross margins fell 10.6ppt YoY). For FY24, management has maintained its guidance for 10% YoY volume growth and double-digit margin (supported by likely price hikes in Q2) for India plywood segment. We cut our PAT estimates by ~4% each year for FY24E/FY25E.
Outlook
Maintain BUY due to inexpensive valuations and roll over the target price to INR 239 (earlier: INR 229) for Sept’24E. We continue to prefer Century Plyboard and Greenpanel Industries over MTLM.
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