Anand Rathi's research report on Greenlam Industries
Backed by its domestic business up 22.2% y/y, Greenlam’s Q1 revenue was up 11.4% y/y to Rs6.7bn. On lower input costs the gross margin expanded 102bps y/y to 53%. Employee/other operating expenses, up 24.3/25.8% y/y (front-loading of cost w.r.t the chipboard plant), pulled EBITDA down 31.1% y/y to Rs441m. PAT slipped into the red due to lower operating profit and higher depreciation/interest expenses. We roll forward to FY28 and expect 17/65% revenue/PAT CAGRs over FY25-28 supported by the rampup in plywood/chipboards.
Outlook
The stock has fallen 15% in a month. We upgrade our recommendation to a Buy with a 12-mth TP of Rs313, 30x FY27e/FY28e average EPS (earlier Rs289, 30x FY27e EPS).
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