Accumulate Greenpanel Industries; target of Rs 355: Prabhudas Lilladher

Prabhudas Lilladher's research report on Greenpanel Industries

Greenpanel (GREENP) guided MDF volume growth of 18%/flat in existing domestic capacity/export with blended volume growth of 15% for FY25E. MDF dom. realizations (down 11.9% YoY) were impacted from increase in OEM direct sales, contributed 27% dom. MDF volume (which management expects to go down in coming years). Plywood expected 6% vol. growth in FY25E vs guided of 8%. Consolidated low EBITDA margin to continue in FY25 at 15.5% with 1) steep increase in RM cost, 2) higher OEM vol. in MDF segment, 3) increase in brand spends, and 4) increased competition in domestic MDF market. Timber prices will continue to impact margins in coming quarters and management indicated moderation in timber prices only when new crop come FY26 onwards. We estimate FY24-26E Revenue/EBITDA/PAT CAGR of 14.2%/20.3%/22.7% with MDF volume CAGR of 17.1%.

Outlook

We downward revise our FY25/FY26E earnings estimates by 30.2%/24.1% to account weak commentary related increasing import and domestic competition, expected to impact MDF realisations. We downgrade the stock to ‘Accumulate’ from Buy with revised TP of Rs355 (Rs 420 earlier), valuing at 20x FY26 earnings.

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