Prabhudas Lilladher's research report on Greenpanel Industries
This revision reflects emerging green shoots in the business, as highlighted by the management, including: (a) no near-term capacity additions in the industry, (b) correction in timber prices, and (c) GREENP’s focus on market share gains, operational efficiency, and sustaining higher mix of VAP, which are expected to drive margin improvement. The management has reiterated its guidance for MDF volume growth of 25% (550k CBM) and overall EBITDA margin of ~12% for FY26. However, we estimate 10% MDF volume growth with an EBITDA margin of 12.1% for FY26. We believe MDF volumes will pick up for GREENP over the coming quarters as the impact of commercial-grade MDF subsides in next 9MFY26 (sharp decline during Jul’24–Mar’25). Additionally, improved utilization at the new plant and market share gains supported by targeted schemes and discounts are likely to aid volume growth. Further, correction in timber prices, reduced fixed costs, and operational efficiencies from better utilization are expected to support margin expansion going forward. We estimate revenue/EBITDA/PAT CAGR of 16.1%/62.8%/70.1% over FY25-27E with MDF volume CAGR of 16.5%. Maintain ‘BUY’ rating.
Outlook
We have upward revised our TP to Rs374 (earlier Rs310), raising the target multiple from 18x to 22x (~18% discount to the avg 1-year forward multiple of 27x over FY20–25).
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