ICICI Direct recommended hold rating on Century Plyboards (India) with a target price of Rs 170 in its research report dated May 29, 2019.
ICICI Direct's research report on Century Plyboards (India)
Century Plyboard’s (CPIL) topline grew 7.3% YoY to Rs 583.2 crore (our estimate: Rs 616.8 crore). Plywood division revenue growth was flattish YoY at Rs 323.5 crore while MDF division revenues grew only 17.4% YoY to Rs 76.0 crore. EBITDA margin contracted 437 bps to 10.9% due to lower EBITDA margin in logistics division & plywood division. PAT de-grew 4.4% YoY to Rs 34.2 crore on account of contraction in EBITDA margin.
While we are positive on CPIL’s long-term growth, EBITDA margins have come under pressure amid stiff competition in MDF and shift of focus on low-margin plywood products. With margins expected to further remain under pressure, we expect revenues, PAT to grow at 11.7%, 14.8% CAGR to Rs 2,824.7 crore, Rs 209.4 crore, respectively, in FY19-21E. Hence, we maintain HOLD rating on the stock with a target price of Rs 170/share.
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