Buy Greenpanel Industries; target of Rs 449: YES Securities

YES Securities is bullish on Greenpanel Industries has recommended buy rating on the stock with a target price of Rs 449 in its research report dated June 19, 2023.

Broker Research

June 21, 2023 / 16:08 IST

Buy

26 Aug, 2025 12:21

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YES Securities' research report on Greenpanel Industries

Demand: Seasonally Q1 is a weak quarter and hence demand is subdued. Moreover, there is some pressure from new domestic capacities & imports as well. Pricing: Domestic prices continue to remain steady while there is a 5-6% hike in export prices, however, benefit of higher export prices will be reflected in Q2FY24 as company had pending orders in Q1FY24. On Input cost: Cost of timber have gone up marginally as compared to previous quarter, however there is some reduction in chemical costs. (Timber & Chemicals constitute 50%-50% of total RM cost). Imports were higher in June’23, however in May’23, the same declined substantially. There is no further development on imposition of any duty to curb imports as yet. The company believes that imposition of ADD is unlikely. Price difference between imports and domestic is ~20% at port-level for like-tolike products. Freight cost for value-added products is ~5-6%. From North to South, freight cost for industrial products is ~12-14% while the same for value-added products is 7- 8%. Current domestic capacity is ~2.7mn cbm/annum which is operating at 70-72% utilization levels. In coming 2-years ~0.9Mn cbm capacity will be added. Action Tesa’s 1-1.2lakh cbm capacity is likely to get operational by Sep’23. Company has committed a capex of Rs6Bn for 220,000cbm brownfield capacity which will be operational by Q1FY25E. GREENP will fund the above capex via mix of debt & internal accruals wherein debt will be Rs2.6Bn.

Outlook

At CMP, stock trades at P/E(x) of 18x/15x on FY24E/FY25E EPS of Rs19/22 respectively. We have valued the stock at 20x on FY25E EPS & arrived at a target price of Rs449, retaining our BUY rating.

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