Hold Greenpanel Industries; target of Rs 39: ICICI Securities

ICICI Securities research report on Greenpanel Industries

Greenpanel Industries (GNPL) has reported better-than-expected revenue at Rs902mn (I-Sec: Rs835mn), down 57% YoY due to 62% YoY decline in plywood segment and 55.7% YoY decline in MDF segment. Gross margin fell sharply by 510bps YoY on higher mix of low-margin MDF exports and operating deleverage. However, with sharp recovery being witnessed in Jun’20 and Jul’20 (achieving ~90% of sales compared to same months last year), management expects a mere 10% decline in MDF revenue for FY21.

Outlook

The encouraging outlook in GNPL’s MDF segment is largely driven by higher demand prospects in domestic modular furniture space post Covid-19 breakout and likely faster recovery in MDF exports. Maintain Hold.