ICICI Direct is bullish on Century Plyboards (India) recommended buy rating on the stock with a target price of Rs 230 in its research report dated November 17, 2020.
ICICI Direct's research report on Century Plyboards (India)
Century Plyboard’s (CPIL) Q2FY21 performance was highlighted by robust MDF division growth coupled with debt collection and improved working capital. The topline declined 11.8% YoY to Rs 519.8 crore. MDF revenue grew 20.4% YoY to Rs 93.5 crore while plywood revenues de-grew 15% YoY to Rs 268 crore. EBITDA margin expanded 80 bps YoY to 16.5% on account of better margin growth in the MDF division (MDF EBITDA margin expanded 580 bps YoY to all-time high of 28.1%) as well as overall cost rationalisation. Overall, PAT was down merely 1.3% YoY to Rs 51.4 crore.
CPIL’s results are praiseworthy on the MDF business front (coupled with overall outlook ahead), while plywood division recovery commentary is also encouraging. We are also impressed by the sharp improvement in balance sheet wherein CPIL has significantly reduced its debt level from Rs 243.5 crore in Q1FY21 to Rs 85 crore in Q2FY21. Hence, we upgrade the stock from HOLD to BUY, with a revised target price of Rs 230/share (22x FY22E EPS).
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