Greenply Industries Ltd. share price target

Greenply Industries: MDF to be the growth driver, Plywood division to benefit from GST, Asset light model, ROE's to improve; Britannia Industries: Continued Focus on improving rural presence to propel growth, Long term strategic direction, Premiumisation on course

Management aims to commission new MDF facility by July, 2018 Greenply Industries (GIL) is setting up a new MDF facility in Andhra Pradesh with a capacity of 360,000 CBM entailing a capex of | 750 crore (already spent | 530 crore till Q2FY18). Construction is in full swing while the management is aiming to commission the plant three months ahead of schedule in July, 2018. It plans to operate the plant at 60% capacity utilisation in FY19E. The new plant will cater to southern demand (30% of GIL's MDF sales). The company would export the remaining portion. It is...

ICICI Securities Ltd | Retail Equity Research We attended the analyst meet of Greenply Industries (GIL). Key takeaways are:- (i) MDF division may drive future growth with management aiming to commission new Andhra facility by July, 2018, (ii) Plywood division is expected to grow at 12-15% CAGR in the next two years with benefits of GST, (iii) New UP plywood capacity (13.5 MSM) and Gujarat decorative veneer unit is expected to be commissioned in Q3FY19E, (iv) Reduction in GST rates from 28% to 18% and scheduled implementation of e-way bill...

EBITDA de-grew by 4% Y-O-Y to `68crs in Q2FY18. EBITDA margins contracted by ~90bps Y-O-Y to 14.3%. Margin contraction was primarily due to loss of `6 crs on foreign currency borrowings and outstanding for new MDF plant at Andhra Pradesh and due to higher advertising expenses. However, gross margins expanded by ~70bpson account of better capacity utilisations and improvement in MDF domestic realisation. EBIDTA margins in...

Revenues for Q2FY18 were ahead of our estimates led by better than expected growth in plywood volumes. Forex fluctuations and decline in plywood realizations impacted the margins. Lower than expected interest expense and lower tax expense led to net profit coming slightly ahead of our estimates. Company expects the volumes to start witnessing improvement from next year onwards once E-way bill gets implemented. Currently, the unorganized market is still not complying to the tax standards and hence the organized players are not able to benefit from the shift of market from unorganized to organized. But once...

Asset light outsourcing model for plywood has worked well for GIL: GIL outsources ~30% of its plywood volumes. This has helped the company to focus on the premium category for own production. GIL enjoys a strong brand recall in the plywood business and company's capacity expansion will be coming on-stream at the right time as its existing capacity is already running at full utilization. We expect Plywood to post Volume/Revenue CAGR of 9%/12% over FY17-20E led by midrange brand Ecotec' (Volume/Revenue CAGR of 18%/22% over FY17-20E). Mega capex in progress; expect earning boost post FY19: GIL currently has a 30% market share mainly in the organized Indian MDF market which in turn is worth...

EBITDA de-grew by 21.5% Y-O-Y to `48.7crs in Q1FY18. EBITDA margins contracted by ~240bps Y-O-Y to 12.5%. Margin contraction was primarily due to decrease in plywood volumes and currency loss of `8.58 crs on foreign currency borrowings for new MDF plant. However, Gross margins expanded by ~230bps on account of better capacity utilisations and a 4% improvement in MDF domestic realisation. EBIDTA margins in the Plywood...

ICICI Securities Ltd | Retail Equity Research Greenply Industries' (GIL) topline declined 5.9% YoY to | 390.3 crore (our estimate: | 418.1 crore) due to the poor performance of the plywood division whose revenues de-grew 13.6% YoY to | 253.4 crore (our estimate: | 285.8 crore) due to volume decline of 11.6% Plywood & allied division volumes de-grew 11.6% to 11.1 mn square metre (MSM) (our estimate: 12.2 MSM) while MDF division volumes grew 8.9% to 49883 CBM (our estimate: 49852 CBM)...

Net sales for Q4FY17 was flat at `446.6crs. Growth was impacted mainly due to lower realisation in both the segments. Plywood sales reported a de- growth of 3.9% (on a net basis). Volume de-growth in the plywood segment was at 1.9% in Q4. MDF sales increased by 8.4% to `138 crs in Q4FY17. MDF segment reported volume growth of 12.7%. Wallpapers contributed ~`2.5 crs to topline in Q4. EBITDA grew by 10.2% Y-O-Y to `72.7crs in Q4FY17. EBITDA margins expanded by ~160 bps Y-O-Y to 16.1%. Margin expansion was primarily due to increase in contribution of MDF to the total mix. Gross margins expanded by ~470 bps on account of improvement in...

ICICI Securities Ltd | Retail Equity Research Greenply Industries' (GIL) topline remained flat YoY (down 0.3%) at | 446.6 crore. However, it was above our estimate of | 407.2 crore on account of the strong performance of MDF division. MDF revenues grew 8.3% YoY to | 137.7 crore (our expectation: | 110.4 crore) EBITDA margins expanded 155 bps YoY to 16.0%. It was above our expectation of 14.9% mainly on account of strong performance in the...