BQ Prime's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer BQ Prime's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Yes Securities Report
Greenlam Industries Ltd. reported stellar numbers wherein laminate volumes grew by 16% YoY and 18% QoQ (four-year compound annual growth rate stood at 10%) largely driven by robust domestic volumes which increased by 21% YoY and 14% QoQ. Export volumes registered a growth of 10% YoY and 25% QoQ.
Laminates Ebitda margins came in at 16.4% as compared to 12.1%/14.8% in Q2 FY23/Q1 FY24 respectively. Consequently, Ebitda/sheet came in at Rs 177 versus Rs 134/ Rs 168 in Q2 FY23/Q1 FY24 respectively.
During the quarter, Greenlam Industries commenced production of new laminate unit at Naidupeta wherein total capacity is 3.5 million sheets per annum, taking the company's total laminate capacity to 24.52 million sheets (largest in India).
During the quarter, working capital stood at 60 -days and net debt as on came in at Rs 6.69 billion (including project debt of Rs 5.49 billion).
Greenlam has escalated capex cost of particle board unit by Rs1.75 billion. Moreover, the company announced further capex of Rs Rs 300 million/Rs 350 million for plywood/laminates unit respectively.
This capex will be funded via mix of debt and internal accruals. Further management reiterated their annual guidance of 20%YoY revenue growth for FY24E with an Ebitda margin of 13-14%.
We believe company will deliver laminate volume growth of 20% CAGR over FY23- FY25E owing to healthy demand in both domestic and export market. Moreover, with higher contribution from value-added products and better utilisation, laminate segment's margins are expected to improve gradually.
Greenlam Industries particle board plant will commence from FY25E nd boost the topline growth, but we believe the same will be profitable from year-two of operations.
Overall, we expect revenue/Ebitda/profit after tax growth of 28%/32%/30% respectively over FY23-FY25E. At current market price, the stock trades at rich price/earning multiple of 28 times on FY25E earning per share of Rs 17.
We have revised our target price to Rs 478 (upwards by 4%), hence we have assigned a 'Neutral' rating to the stock.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
