Century Plyboards (India) Ltd. share price target

We recently met the management of Century Plyboards (CPBI) for insights into the company's FY20 growth outlook. Key takeaways: (1) MDF segment to log 80-90% capacity utilisation, (2) plywood/laminate businesses to grow ~10%/15%, (3) blended margin to improve backed by margin gains across the MDF, plywood and laminate segments, albeit partly offset by competitive pressures in CFS. Maintain BUY on reasonable valuations of 15.9x FY21E...

MDF and Particle board capacity to rise: Century is planning to increase its capacities in MDF and Particle board verticals. As MDF unit is expected to operate at a 90% capacity utilisation during FY2020 (68% during Q4FY2019), Century may undertake a Rs. 150 crore capex plan to increase MDF capacity by 400 cubic metre to 1,000 cubic metres, in less than a year (as...

CPIL's MDF facility operated at 68% capacity utilisation in Q4FY19. It could not achieve targeted 80% utilisation as the plant was shut 15 days due to technical fault in Q4FY19. MDF realisations declined 2% QoQ to | 21,469/CBM in Q4FY19 due to stiff competition. Consequently, MDF EBITDA margins declined 60 bps QoQ to 15.3% in Q4FY19. With no price cuts taken by MDF players in the last 45-60 days, the management expects prices to remain stable. Also, it aims 90% capacity utilisation by Q2FY20E. Overall,...

Century Plyboards' (CPBI) Q4FY19 revenue growth was marginally short of estimates at 7% YoY. Operating margins contracted 437bps YoY to 10.9% due to weakness in both the plywood and laminate segments, leading to a 23% fall in EBITDA. Management has guided for >10% revenue growth with better margins for FY20. In light of the weak quarter, we cut FY20/FY21 PAT estimates by 8%/6%. Rolling forward, we have a revised Mar'20 TP of Rs 200...

Century Ply has reported another weak quarter. However the results are not as weak as they optically appear.

CPIL posted 13.5% YoY increase in revenue in Q3FY19 primarily driven by spurt in revenue from MDF (85.4% YoY), laminates (28.6% YoY) and particle board (57.7% YoY) segments. However, decline in revenue from key plywood segment (2.6% YoY) weighed by weak realisation (6% YoY) restricted the topline growth. However, sales volume of Plywood segment increased by 7% YoY. While the growth in MDF revenue was driven by surge in volumes that grew by 105% YoY which helped to offset 10% YoY decline in realisation, improvement in both volumes and realisation...

Century Plyboards reported weaker than expected Q3FY19 results due to lower than expected sales/ margins in Plywood segment. Nevertheless, strong sales/ profitability improvement in MDF segment is commendable given the oversupply and ongoing price-war in the domestic market. Century's net sales at Rs5.8 bn was in-line with our forecast. However, EBITDA at Rs759 mn was 15.1% below our forecast. MDF segment sales jumped 44.0% QoQ to Rs882 mn, while segment EBIT stood at Rs95 mn vs. loss of Rs5 mn in Q2FY19. Plywood segment sales were weak at Rs3,143 mn (-2.6% YoY, -2.5%...

ICICI Securities Ltd | Retail Equity Research Century Plyboards (CPIL) topline grew 13.5% YoY to | 578.9 crore, mainly led by better utilisation in MDF division. MDF division clocked revenues of | 88.2 crore in Q3FY19 vs. | 47.3 crore in Q3FY18 EBITDA margins were flattish QoQ at 13.1% (our expectation: 14.5%) due to lower EBITDA margin in plywood division (12.1% in Q3FY19) PAT de-grew 11.2% YoY to | 41.4 crore (our expectation: | 44.6 crore) mainly on account of a contraction in EBITDA margin...

Century Ply has reported a weak profitability in the quarter. Sales at INR 579cr grew by 14% YoY and were 5% above our estimates.

With more than 25% market share in the organised plywood market, Century is one of the leading manufacturers of plywood in India. They also manufacture laminates, particle boards, fibre cement boards and engineered doors. CPBI currently has 7 manufacturing units across India with 30 marketing offices and dealer distribution network of 1500 dealers and 15000 retailers. The company forayed in to the MDF segment in FY18 given the growth opportunity in the industry (from Rs 18bn in 2018 to Rs 30bn in 2022), low Plywood:MDF penetration levels of 94:06 in India versus 64:36 globally, rising...