Buy Greenply Industries; target of Rs 427: Anand Rathi

Anand Rathi's research report on Greenply Industries

Greenply’s Q1 revenue grew 2.9%y/y to Rs6bn. Easing input costs pushed the gross margin up 205bps y/y to 42.8%. Higher employee and other expenses restricted the EBITDA margin improvement to 34bps y/y, to 10.3%. Adj. PAT fell 27.6% y/y to Rs240m. PAT fell chiefly due to more losses at the JV/subsidiaries apart from higher, 77.9% y/y, interest expenses, partly offset by higher, 129.3% y/y, other income. We expect 13/51% revenue/earnings CAGRs over FY25-28, chiefly due to the low base and greater share of the high-margin MDF business.

Outlook

We retain our Buy recommendation on the stock, with a higher 12-mth TP of Rs 427, 22.5x the average FY27e/FY28e EPS (earlier Rs387, 22.5x FY27e EPS).