Buy Century Plyboards; target of Rs 255: ICICI Direct

Century Plyboard’s (CPIL) revenues grew 11.7% YoY to Rs 405.8 crore and was broadly in line with our estimate of Rs 401.8 crore on the back of 11.7% YoY growth in revenues of plywood and allied segment to Rs 286.6 crore. However, revenues of laminates & allied division were subdued with a 3.4% YoY growth to Rs 79.5 crore. The EBITDA margin contracted 133 bps YoY to 16.8% (vs. our expectation: 18%) mainly due to contraction of 210 bps in the EBIT margin of the plywood & allied division to 15.2% (vs. our expectation: 15.5%). On the positive side, laminated & allied segment margin improved 140 bps YoY to 14.8% PAT grew 7.2% YoY to Rs 43.1 crore and was marginally above our expectation of Rs 40.2 crore.

We continue to like CPIL as we envisage the Indian organised plywood player’s pie (currently 30% of total plywood market) will expand in coming years on the back of structural changes like rollout of GST and higher brand aspirations. We expect revenues, bottomline to grow at 18.2%, 19.4% CAGR to Rs 2354.6 crore, Rs 235.7 crore in FY16-18E, respectively. Hence, we continue to maintain our BUY recommendation on CPIL with a revised target price of Rs 255 (24x FY18E EPS).For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.