Religare reserach has maintained buy rating on Greenply Industries with target price of Rs 252 in its July 28, 2008 report. "Greenply Industries' (GIL) results have come in ahead of our estimates on the operational level as robust growth in plywood and laminate volumes coupled with increased trading in the plywood segment aided a 48% YoY sales growth. Price hikes across segments enabled the company to pass on the increased cost of raw materials, thereby protecting the EBITDA margin on a sequential basis. However, MTM forex losses resulted in a 23% YoY decline in net profits to Rs 69.6mn as against Rs 120mn expected. GIL plans to increase outsourcing (trading) operations in the plywood division besides commencing trade in MDF (medium density fibre board) in order to establish a market for its own product. Trading operations could drag down margins, though the company is contemplating further price hikes of its existing products to stabilise margins at current levels. Completion of the capex for its MDF and laminate plants would boost revenues from FY11 onwards. We maintain a Buy with a DCF-based target price of Rs 252. At this price, the stock would trade at 7.8x FY10E EPS" according to Religare report.
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