Accumulate Greenply Industries; target of Rs 322: Kotak Securities

Kotak Securities' research report on Greenply Industries

Revenues for Q2FY18 were ahead of our estimates led by better than expected growth in plywood volumes. Forex fluctuations and decline in plywood realizations impacted the margins. Lower than expected interest expense and lower tax expense led to net profit coming slightly ahead of our estimates.

Outlook

We weak our estimates and arrive at a price target of Rs 322 based on 25x FY19 estimates. Volumes are likely to recover sharply from FY19 onwards and company plans to cater to improved demand going forward with higher value added products, increased outsourcing in plywood and new capacity in plywood and MDF. Owing to limited upside from the current levels, we maintain ACCUMULATE rating on the stock and would advise investors to look for declines to enter the stock.