Anand Rathi is bullish on Century Plyboards has recommended buy rating on the stock with a target price of Rs 225 in its research report dated November 22, 2018.
Anand Rathi's research report on Century Plyboards
Held back primarily by poor margins in MDF (more pricing pressure because of increased industry capacity) and in laminates (higher input costs), Century?s Q2 was weak, with PAT down 6% y/y. Besides, the depreciating rupee played a role (at the PBT level, forex loss of `108m). Plywood, on the other hand, did better. For these reasons, we cut our FY19e and FY20e earnings respectively 9.3% and 6.7%. Expecting a gradual recovery in margins (on a price hike in laminates and normalisation of pricing pressure in MDF), we now expect 15% and 26% CAGRs over FY18-20 in respectively revenue and PAT. We maintain a Buy with a lower target price of `225 (20x FY20e P/E).
We expect PAT to register a 26% CAGR over FY18-20. We lower our target price from `301 to `225 (20x FY20e P/E) owing to revision in the earnings/target multiple and maintain a Buy.
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