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ICICI Securities Report
In Q3 FY23, Greenpanel Industries Ltd. reported flat consolidated revenue YoY with medium density fibre volumes declining 2.1% YoY (-6.3% QoQ) as domestic volumes fell 7.4% YoY (-6.7% QoQ) due to rise in imports.
Consolidated operating margin declined 264 basis points YoY (-136bps QoQ) on lower margin in MDF/plywood segment resulting in Ebitda/profit after tax decline of 11.1%/20.9% YoY, respectively.
While Q3 was a dull quarter, the key positive was high cashflow generation of Rs 940 million. We expect MDF domestic volumes to remain under pressure in the near term on higher imports which may also adversely affect the margins.
Management has guided for MDF volume growth of 10-15% with operating margin of 25-26% in FY24E. We continue to like Greenpanel Industries for its strong net cash balance sheet, leadership position in MDF and attractive valuations (12.4 times price/earning FY24E).
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