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Please refer to important disclosures at the end of this report
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Greenply Industries Ltd(GIL), is one of the India’s largest interior infrastructure
companies. It is engaged in the manufacturing of plywood and MDF(Medium
Density Fibreboards). GIL is setting up a new MDF facility in Andhra Pradesh
with a capacity of 360000 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 FY19. The new plant will
cater to southern demand (30% of GIL’s MDF sales). The company would export
the remaining portion. It is aiming at full utilisation by FY22. GIL is also
expanding its plywood capacity due to capacity constraints at its existing units. It
is setting up a facility in UP with manufacturing capacity of 13.5 MSM, which
would take its total capacity to 45.9 MSM. It plans to spend ~`125 crore and
would manufacture premium plywood at the plant. The plant is expected to come
on stream by Q3FY19. GIL is also setting up a decorative veneer unit in Gujarat
that is also expected to be commissioned by Q3FY19. To ensure raw material
security, the company has also set up a veneer unit in Gabon. Currently, three
production lines are operational while the remaining three would be operational
by December, 2017. Reduction in GST rates from 28% to 18% coupled with
expected implementation of E-way bill by April 1, 2018 would result in a quicker
shift from unorganised to organised players. Consequently, the management
expects 12-15% revenue CAGR in the plywood division over the next two years. It
has reported profit growth of 17% over last 5 years. Further its EBITDA margin
has improved from 10.48%in FY12 to 14.75% in FY17 and cashflows has been
maintained ~ `185cr over last 4 years.The company has RoE of 15.56% and it is
currently trading at valuation of 30.89x of TTM earnings.GIL as the share of
organised plywood players (currently 30% of plywood market) is set to expand
with GST rate cut, higher brand aspirations & GIL’s strong brand presence. GIL’s
strategy of capex across product segments like plywood, MDF & decorative
veneer bode well for the company’s future growth. Hence BUY
BUY
CMP `334
0.7
Reuters Code
GRPL.NS
MTLM:IN
1
BSE Sensex
32,597
Nifty
10,044
Face Value (`)
Forest Product
Market Cap (` cr)
4,104
52 Week High / Low
345/238.3
Avg. Daily Volume
4,036
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Greenply Industries Ltd
Others |Forest Product
Dec 06, 2017
2
Greenply Industries Ltd |Forest Product
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Greenply Ind
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)