Greenlam Industries - Entry Into A New Business To Drag Profitability: HDFC Securities

NDTV Profit’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 NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..HDFC Securities Institutional Equities.We expect Greenlam Industries Ltd. to outperform laminates industry growth and deliver strong margin in this segment. We expect a 12% revenue CAGR in the laminate segment during FY24-27E. Owing to entry into the new ply and particle board segments, we expect a strong 18% revenue CAGR during FY24-27E at the company level. We estimate 21/22% Ebitda/adjusted profit after tax CAGRs for the same period. We like Greenlam for its leadership positioning in laminates. However, we are cautious of plant ramp-up in the new ply and particle board segments (large capacities added in a short period). Owing to supply pressure and elevated timber price, we expect particle board segment margin to remain under pressure in the medium term. We maintain our FY25/26/27E estimates for all business (ex-particle board). We have factored in slower ramp-up of particle board business, leading to a cut of 1/5/5% in APAT estimates for FY25/26/27E respectively. We expect particle board business to incur a PAT loss until FY27E. So, we have moved to SOTP-based valuation methodology from consolidated EPS based earlier. We now value Greenlam (exparticle business) at the same 33x its Sep-26E. We have valued the upcoming particle board business at 0.5x P/B Sep-26E, leading to SOTP based revised target price of Rs 640/share. We maintain our Add rating on the company..Click on the attachment to read the full report:.NBFCs - Risk Management, Regulatory Compliance More Important Than Ever: Motilal Oswal.DISCLAIMERThis report is authored by an external party. NDTV Profit 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 NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Greenlam Industries - Entry Into A New Business To Drag Profitability: HDFC Securities

The brokerage maintains its Add rating on the company and revises target price.

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