Greenply Industries Ltd. share price target

BUY Greenply Industries Ltd at CMP Rs.253 and add on dips to Rs. 224- 230 for the Target of Rs. 285, 321

EBIT stood at `49.8crs in Q1FY17 recording a growth of 17.5% Y-O-Y, with margins expanding ~80bps on a Y-O-Y basis. Segmental EBIT followed suit with Plywood and MDF recording EBIT margins of 7.5% (+170bps) and 25.8 %(-100bps) respectively. Reported Profit after Tax grew by 26.4% Y-O-Y to `34.1crs in this quarter. PAT Margin too went up to 8.2% as opposed to 7.1% in this quarter last year. Profitability improved on...

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Greenply Industries (GIL) is a leading plywood player (~26% market share) and a market leader in the MDF segment (30% market share) in the organised segment of the wood panel industry. With a strong pan-India presence, well entrenched distribution network, GIL is likely to ride the transition towards the organised space with expected roll-out of GST. Consequently, we expect topline/bottomline to grow at 11.5%/16.5% CAGR, respectively, in FY16-18E. Hence, we initiate coverage on GIL with a BUY recommendation and target price of | 225 (16x FY18E EPS).

Sustainable raw material linkage envisages long term visibility Consistent supply of quality raw materials is critical for long-term sustainability of plywood business. Greenply Industries Ltd. (GIL) planted over 3 Mn saplings in 2014-15 in order to ensure sustainable raw material availability through farm/ agro-forestry around all manufacturing units to reduce dependence on overseas timber and bring down logistical costs. GIL also entered into a joint venture with a Singapore based company to control and run the veneer manufacturing facility in Myanmar through joint venture.

Greenply Industries ltd (GIL) is a domestic interior infrastructure company, engaged in manufacturing and marketing of wide range of interior infrastructure products. The company provides both...