Buy Century Plyboards India; target of Rs 715: HDFC Securities

HDFC Securities' research report on Century Plyboards India

We like Century for its strong franchise (pan-India distribution, aggressive marketing, and a wide range of SKUs), leadership presence in most wood segments, market share gains and healthy return ratios. In Q4FY23, Century’s consolidated revenue/ EBITDA/APAT rose by 7/2/30% YoY, mainly driven by a rebound in ply earnings. Its EBITDA rose 27% QoQ, led by a recovery of 350/300bps margin QoQ in the ply/MDF segments. Despite the expected margin pressure in MDF and particle boards during FY24/25E, we expect Century to deliver a 15% EBITDA CAGR during FY23-25E.

Outlook

We maintain our BUY rating on Century Ply, with an unchanged target price of INR 715/sh (20x its Mar’25E consolidated EBITDA; implies 34x P/E).

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