Buy Greenpanel Industries; target of Rs 440: Emkay Global Financial

Emkay Global Financial's research report on Greenpanel Industries

Our channel checks suggest that volume trajectory for the MDF segment is expected to remain weak in Q2FY24 owing to the subdued demand environment and sustained pressure of MDF imports (monthly run-rate: ~30K CBM). Timber prices in the southern region have further firmed up, with a likely 10% QoQ increase (+2% QoQ in Q1FY24), while having broadly stayed stable in the North. However, declining resin prices and lower marketing spends could provide some respite to margins in Q2FY24E. We continue to like Greenpanel, given its leadership position in the MDF segment, industry-leading margins, lean working capital, and strong balance sheet.

Outlook

However, near-term challenges may pose downside risk to our/ consensus estimates for FY24. We have a BUY rating on the stock, with Jun-24E TP of Rs440/sh, based on 18x P/E.