Buy Greenply Industries; target of Rs 423: Choice Equity Broking

Choice Equity Broking's report on Greenply Industries

We maintain BUY rating on Greenply Industries Ltd (Bloomberg Code: MTLM) with a revised target price of INR 423/Share as we factor in 1) Volume growth (9.7% over FY25-28E which exceeds industry growth of ~7%) driven by market share gains from unorganized players in the plywood segment, 2) addition of 25% capacity and higher capacity utilization (increases by 25% over FY25-28E) in MDF segment, which would drive volume growth, 3) Revenue contribution from the new JV, BV Samet from FY26 onwards and incorporate a PEG ratio based valuation framework that allows us a rational basis to assign a valuation multiple that better captures earnings growth.

Outlook

We do a sanity check of our PEG ratio based TP using implied EV/EBITDA, P/BV, and P/E multiples. On our TP of INR 423, FY27E implied EVEBITDA/PB/PE multiples are 14.2x/4.6x/25.8x all of which are reasonable in our view. Slowdown in Real estate and home improvement activities, delay of BIS & QCA norms on imports and higher timber cost are risks to our BUY rating.