Greenlam Shares: New Segments Entry, Margin Pressure In Near Term, Says HDFC Securities Maintaining 'Add'

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HDFC Securities Institutional Equities

We maintain Add with an unchanged target price of Rs 250/share. Owing to supply pressure and elevated timber prices, we expect the particle board segment margin to remain under pressure in the medium term.

We expect a 10% revenue CAGR in the laminate segment over FY25-28E.

Owing to entry in the new ply and particle board segments, we expect a healthy 16% consolidated revenue CAGR over FY25-28E. We project 22/45% Ebitda/APAT CAGRs for the same period on a low base.

We value Greenlam using SOTP—ex-particle board business at 30x Sep-27E EPS and particle board business at 0.5x capital employed Sep-27E.

We like Greenlam for its leadership positioning in laminates. However, we are cautious timely plant ramp-up in the new ply and particle board segments (large capacities added in a short period).

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