CLSA also slashed its price target on stock to Rs 174 from Rs 195 earlier, implying 14 percent downside from current levels.
Century Plyboards shares fell in morning on April 10 after global investment firm downgraded stock to sell from buy, citing pressure on realisations and margin.
The research house also slashed its price target on the stock to Rs 174 from Rs 195 earlier, implying 14 percent downside from current levels.
The stock was quoting at Rs 195.50, down Rs 7.50, or 3.69 percent on the BSE, at 09:17 hours IST. In last one year, it plunged 42 percent, but in 2019 it gained 14 percent.
"We see continuing supply glut in the medium-density fibreboard (MDF) market in India. Realisations and margins are likely to remain under pressure," CLSA said.
The brokerage further said industry saw large capacity additions in a short span of time. "Greenply's south capacity is operating at around 30 percent utilisation, Rushil Décor's new plant will be operational in FY20 and Century has currently put its MDF capacity addition plans on hold."
Its valuations at 20X FY20 are reasonable, but the lack of earnings triggers will keep stock performance muted, CLSA said.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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