Hold Greenply Industries; target of Rs 160: ICICI Direct

ICICI Direct's research report on Greenply Industries

Greenply Industries has demerged (record date: July 15, 2019) into Greenply Industries (plywood business) & Greenpanel Industries (largely MDF business with small component of plywood business). Shareholders of the erstwhile Greenply Industries will get one share each of the newly formed Greenply Industries (currently listed) & Greenpanel Industries (could get listed in Q3 FY20E separately). We would be tracking the newly formed Greenply Industries (GIL), which is mainly into the plywood business. The topline grew 13.1% YoY to Rs 349.4 crore while the bottomline grew 81.7% YoY to Rs 21.0 crore in Q1FY20.

Outlook

GIL moving towards an asset-light business model by targeting growth through outsourcing remains the silver lining for the company. However, with the domestic plywood business growing at a muted rate, GIL is expected to derive growth largely from exports business in Gabon, which should be watched, due to dynamics in the international market. Hence, we maintain HOLD recommendation on the stock with a TP of Rs 160/share.