Company Background :
Greenply Industries Limited is an interior infrastructure company. The Company is engaged in the business of manufacturing plywood and allied products, medium density fiberboards (MDF) and allied products through its factories at various locations. The Company's segments include Plywood & Allied Products and Medium Density Fibre Boards & Allied Products. The Plywood & Allied Products segment is engaged in the business of manufacturing and trading of Plywood, block boards, veneer, doors, and other wood panel products through its wholesale and retail network.
The Medium Density Fibre Boards & Allied Products segment is engaged in the business of manufacturing of Medium Density Fiberboards and other allied products through its wholesale and retail network. The Company offers a portfolio of residential and commercial products comprising plywood and block boards, MDF, wood floors, flush doors, and decorative veneers. The Company offers Wood floors under the brand name Green Floormax.
Financial Performance :
Greenply Industries Ltd (Greenply) is India’s leading plywood and medium density fibreboard (MDF) manufacturer with market share of 26% (organized plywood) and 30% (MDF) in India. The company has a presence in over 300 cities across 21 states serviced through a well-entrenched distribution network of 2,497 dealers and authorized stockists. We estimate revenue CAGR of 19.1% over FY18E-20E. This will be led by increasing urbanization and rising spend on home improvement.
The company is planning to increase its plywood capacity by 40% and MDF capacity by 100% to meet the increasing demand. The entire capacity is to be operational from FY19E onwards. Thus, we expect the company to be ready to take advantage of the market share gains post the implementation of GST. We expect EBITDA CAGR of 20.4% over FY18E-20E on the back of increasing mix of value added products. We see PAT CAGR of 16.4% over FY18E-20E.
Stock Performance:
During the last 1 year the scrip has given following returns
The scrip has touched a low of 190 and a high of 401.
1 year - minus 33.12%
6 months - minus 46.63%
3 months - minus 12.22%
1 month - 1.48%
1 week - minus 5%
Recommendation :
Buy and add to your long term portfolio. In the short term 220 will be a good resistance point. The scrip may correct in the short term, and Rs.180 is the support level in case of a correction. Hold long term for a Target price of 325 in next 12 months and 420 for 18 months holding in view of the quarter on quarter improvement in financials
Raghav
Equity Research Analyst
Smart Investor
Equity Research
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