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Greenply Industries (GIL) is a leading plywood and laminates brand, 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 the industry.
GIL increased its laminates capacity by 88% in FY2010 and is witnessing strong
demand for its products. The company achieved 98% capacity utilisation in
1QFY2012 and ended FY2011 with 94% capacity utilisation. We expect utilisation
to further improve to 110% in FY2012, which will boost its revenue going ahead.
GIL forayed into the lucrative, high-growth MDF market in FY2011, with the largest
MDF plant in India (1,80,000m3/year 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 4QFY2011, the segment reported
first-time revenue of around `32cr, which further improved to `46cr in 1QFY2012
due to higher utilisation, which increased to 49.3% for the quarter. We expect the
segment to achieve 45% capacity utilisation by FY2012, which would further bolster
the company’s revenue and improve its margin.
Currently, the stock is trading at 4.9x FY2013E earnings, which is at the lower end
of its historical average of 4.3x-17.0x one-year forward EPS. We maintain our Buy
rating on the stock with a target price of `311.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Greenply Industries (GIL) is a leading plywood and laminates brand, 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 the industry.
GIL increased its laminates capacity by 88% in FY2010 and is witnessing strong
demand for its products. The company achieved 98% capacity utilisation in
1QFY2012 and ended FY2011 with 94% capacity utilisation. We expect utilisation
to further improve to 110% in FY2012, which will boost its revenue going ahead.
GIL forayed into the lucrative, high-growth MDF market in FY2011, with the largest
MDF plant in India (1,80,000m3/year 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 4QFY2011, the segment reported
first-time revenue of around `32cr, which further improved to `46cr in 1QFY2012
due to higher utilisation, which increased to 49.3% for the quarter. We expect the
segment to achieve 45% capacity utilisation by FY2012, which would further bolster
the company’s revenue and improve its margin.
Currently, the stock is trading at 4.9x FY2013E earnings, which is at the lower end
of its historical average of 4.3x-17.0x one-year forward EPS. We maintain our Buy
rating on the stock with a target price of `311.
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