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Greenply Industries (GIL) registered strong top-line growth in 2QFY2012.
The company’s net sales grew by 43.1% yoy and 17.3% qoq to `414cr.
GIL reported a 110bp yoy expansion in OPM to 8.9% mainly due to lower
administrative and selling expenses. OPM would have expanded further but the
company reported forex loss of `11cr during the quarter. Net profit increased by
537% yoy to `10cr. We believe GIL is well placed to benefit from its laminate
capacity expansion, improved utilization levels of the MDF plant and expansion in
the plywood segment. Hence, we maintain our Buy view on the stock.
Top line posts strong yoy growth: For 2QFY2012, GIL’s top line grew by 43.1%
yoy to `414cr mainly due addition of the MDF segment and robust growth of
28.6% and 24.7% yoy in the plywood and laminate segments, respectively. Going
ahead, the company will hedge its forex exposure for the coming two quarters
and, thus, we expect forex loss to be minimal, which will result in better margin
and profitability.
Outlook and valuation: We believe concerns related to the MDF segment have
receded considerably. Hence, higher utilization levels in the MDF segment will
aid in improving GIL’s overall margins on a qoq basis going ahead. The MDF
segment is expected to achieve 45% utilization rate in FY2012. Further, the
company is well placed to benefit from 1) its laminates capacity expansion,
which increased nearly two-folds in FY2010 and is expected to achieve
100%+ utilization in FY2012 and 2) expansion of its plywood capacity by
3.75mn sq. ft., which is expected to contribute around `45cr to FY2012 top
line. At `204, the stock trades at 5.7x FY2013E earnings. We maintain our
Buy rating on the stock with a revised target price of `284, valuing the stock
at 8x FY2013E earnings.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Greenply Industries (GIL) registered strong top-line growth in 2QFY2012.
The company’s net sales grew by 43.1% yoy and 17.3% qoq to `414cr.
GIL reported a 110bp yoy expansion in OPM to 8.9% mainly due to lower
administrative and selling expenses. OPM would have expanded further but the
company reported forex loss of `11cr during the quarter. Net profit increased by
537% yoy to `10cr. We believe GIL is well placed to benefit from its laminate
capacity expansion, improved utilization levels of the MDF plant and expansion in
the plywood segment. Hence, we maintain our Buy view on the stock.
Top line posts strong yoy growth: For 2QFY2012, GIL’s top line grew by 43.1%
yoy to `414cr mainly due addition of the MDF segment and robust growth of
28.6% and 24.7% yoy in the plywood and laminate segments, respectively. Going
ahead, the company will hedge its forex exposure for the coming two quarters
and, thus, we expect forex loss to be minimal, which will result in better margin
and profitability.
Outlook and valuation: We believe concerns related to the MDF segment have
receded considerably. Hence, higher utilization levels in the MDF segment will
aid in improving GIL’s overall margins on a qoq basis going ahead. The MDF
segment is expected to achieve 45% utilization rate in FY2012. Further, the
company is well placed to benefit from 1) its laminates capacity expansion,
which increased nearly two-folds in FY2010 and is expected to achieve
100%+ utilization in FY2012 and 2) expansion of its plywood capacity by
3.75mn sq. ft., which is expected to contribute around `45cr to FY2012 top
line. At `204, the stock trades at 5.7x FY2013E earnings. We maintain our
Buy rating on the stock with a revised target price of `284, valuing the stock
at 8x FY2013E earnings.
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