January 27, 2017 / 13:37 IST
Plywood division was less impacted post demonetisation as its volume de-growth was limited to 6.8%. The plywood division revenues de-grew 10.5% YoY to Rs 260.3 crore due to volume de-growth of 6.8% YoY to 11 MSM (million square metre) and drop in realisation by 3.7% to Rs 233/ sq metre. The company also reported strong EBITDA margin expansion of 320 bps YoY to 12.6% on the back of lower timber prices and higher yield in plywood.
OutlookWe are positive on GIL as the share of Indian organised plywood players (currently 30% of plywood market) is set to expand with anticipated GST rollout, higher brand aspirations & GIL’s strong brand presence. However, post demonetisation, two of the key demand drivers i.e. real estate sector & renovation cycle have been suffering resulting in demand disruption in the near term. We have rolled over our estimates to FY19 and maintain our HOLD recommendation on the stock with a revised TP of Rs 265 (20x FY19E EPS).
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