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Buy Greenply Industries; target of Rs 237: YES Securities

YES Securities is bullish on Greenply Industries has recommended buy rating on the stock with a target price of Rs 237 in its research report date May 16, 2022.

May 17, 2022 / 08:07 PM IST
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YES Securities' research report on Greenply Industries

Greenply Industries Ltd (GIL) registered a decent set of numbers for Q4FY22. Topline grew by 13%YoY (4% above our estimates), however EBITDA margins were 100bps below our estimates at 10% mainly on account of higher than expected advertisement expenses which came in at 5.2% in Q4FY22. Company’s volumes increased by 8.2%YoY to 17.1msqm & realizations improved by 7%YoY on account of price hikes taken by GIL to mitigate the rise in input cost. We reckon, uptick in real‐estate industry & formalization of industry should lead to higher demand for GIL which should enable the company to deliver volume growth of 10% over FY22‐FY24E. Moreover, company’s new plywood facility will commence commercial operations in Q1FY23 which will cater the incremental growth. Realizations should also expand by 3%YoY which will largely be to pass‐on the rise in input cost. From FY24E, new MDF unit will also start to contribute to company’s performance, the plant is likely to commence commercial operations by Q4FY23E. For FY24E, we reckon MDF plant to operate at 50% utilizations.


Owing to reasons stated above, we expect GIL’s Revenue/EBITDA/PAT to grow by 19%/35%/30% over FY22‐FY24E. EBITDA margins are likely to expand from 10% in FY22 to 11.2%/12.4% in FY23E/FY24E on account of better operational efficiencies & expected stabilization of Gabon operations. MDF unit will accelerate company’s growth & lead to margin expansions from FY24E. We continue to value the company at 18x on FY24E EPS of Rs13 (revised downwards), arriving at a target price of Rs237 (previous Rs252). We maintain our BUY rating on the stock.

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first published: May 17, 2022 08:07 pm
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