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Strong brand, high ad-spend: GIL has leading plywood and
laminates brands, supported by ad-spend as high as 4.0% of
sales (around 10% of laminates revenue). The company also
has the largest distribution network of over 15,000 dealers in
this industry.
Increasing laminate capacity: GIL is continuing its strong
expansion in laminates (88% capacity expansion), that is
estimated to drive 25% CAGR in sales over FY2010-12. GIL is
witnessing very strong demand for its laminate products, with
both its new production lines running at full capacity.
Banking on MDF: GIL forayed into the lucrative, high-growth
MDF market in FY2011, with the largest MDF plant in India
(1,80,000m3/yr capacity). The MDF opportunity is especially
huge as it constitutes 20% of wood panel consumption in India,
while plywood constitutes 80% - the reverse holds true globally.
In 3QFY2011,the segment reported first time revenues of around
`14cr. In 4QFY2011, the segment is expected to achieve 45%
capacity utilisation, which would futher bolster revenues and
improve margins in the ensuing quarters. The segment is expected
to achieve 55% capacity utilisation by FY2012.
New plywood license constraint: Going forward, with strict control
on the issue of new plywood licenses and 5-7% CAGR in panel
demand would result in MDF meeting this demand and
registering 25-30% CAGR over FY2011-14E. Moreover, currently
80% of the present consumption is being met through imports,
which we believe that GIL can substitute given the high freight
costs and 25% anti-dumping duty on imports.
Further expansion of licensed capacity: GIL holds licenses for
additional plywood capacity. In line with this, it is further
expanding capacity by 3.75mn sq ft, which will augment its
FY2012E revenues by nearly `45cr.
The stock is currently trading 5.5x FY2012E earnings (as against
its historical range of 3.3-9.3x 1-year forward EPS). We maintain
a Buy on the stock with a target price of `266, valuing the stock
at 8x FY2012E earnings.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strong brand, high ad-spend: GIL has leading plywood and
laminates brands, supported by ad-spend as high as 4.0% of
sales (around 10% of laminates revenue). The company also
has the largest distribution network of over 15,000 dealers in
this industry.
Increasing laminate capacity: GIL is continuing its strong
expansion in laminates (88% capacity expansion), that is
estimated to drive 25% CAGR in sales over FY2010-12. GIL is
witnessing very strong demand for its laminate products, with
both its new production lines running at full capacity.
Banking on MDF: GIL forayed into the lucrative, high-growth
MDF market in FY2011, with the largest MDF plant in India
(1,80,000m3/yr capacity). The MDF opportunity is especially
huge as it constitutes 20% of wood panel consumption in India,
while plywood constitutes 80% - the reverse holds true globally.
In 3QFY2011,the segment reported first time revenues of around
`14cr. In 4QFY2011, the segment is expected to achieve 45%
capacity utilisation, which would futher bolster revenues and
improve margins in the ensuing quarters. The segment is expected
to achieve 55% capacity utilisation by FY2012.
New plywood license constraint: Going forward, with strict control
on the issue of new plywood licenses and 5-7% CAGR in panel
demand would result in MDF meeting this demand and
registering 25-30% CAGR over FY2011-14E. Moreover, currently
80% of the present consumption is being met through imports,
which we believe that GIL can substitute given the high freight
costs and 25% anti-dumping duty on imports.
Further expansion of licensed capacity: GIL holds licenses for
additional plywood capacity. In line with this, it is further
expanding capacity by 3.75mn sq ft, which will augment its
FY2012E revenues by nearly `45cr.
The stock is currently trading 5.5x FY2012E earnings (as against
its historical range of 3.3-9.3x 1-year forward EPS). We maintain
a Buy on the stock with a target price of `266, valuing the stock
at 8x FY2012E earnings.
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