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Research
Greenply Industries - 4QFY2012 Result Update - Angel Broking
Posted On : 2012-06-06 21:06:13( TIMEZONE : IST )
Greenply Industries (GIL) registered strong top-line growth in 4QFY2012. The company's net sales grew by 31.2% yoy and 9.6% qoq to Rs.459cr. GIL reported a 248bp yoy expansion in its OPM to 10.6%. OPM expanded due to forex gain of Rs.4cr during the quarter. Net profit increased by 174% yoy to Rs.16cr. We believe the company 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: All three segments reported strong growth during the quarter. The plywood segment registered 18.3% yoy growth to Rs.217cr and the laminate segment registered 18.6% yoy growth to Rs.159cr. The MDF segment was the company's main growth driver during the quarter, registering Rs.82cr of revenue vs. only Rs.31cr in 4QFY2011, up 164% yoy. During the quarter, the company reported other income of Rs.6cr and forex gain of Rs.4cr. PAT increased by 174% yoy on the back of higher revenue, margin expansion and other income during the quarter. Going ahead, we expect revenue to further increase on account of better utilization in the MDF segment and improved revenue mix in the laminate segment.
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 margin on a qoq basis going ahead. The MDF segment is expected to achieve 90% utilization in FY2013. 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 FY2013 and 2) expansion of its plywood capacity by 3.75mn sq. ft. coming on line. At Rs.212, the stock trades at 4.7x FY2014E earnings. We maintain our Buy rating on GIL with an upward revised target price of Rs.317, valuing the stock at 7x FY2014E earnings.
