Greenply Industries Ltd - ACCUMULATE - TP Rs.322 - Result Update - Kotak

- Revenues for Q2FY18 were ahead of our estimates led by better than expected growth in plywood volumes. Forex fluctuations and decline in plywood realizations impacted the margins. Lower than expected interest expense and lower tax expense led to net profit coming slightly ahead of our estimates.

- Company expects the volumes to start witnessing improvement from next year onwards once E-way bill gets implemented. Currently, the unorganized market is still not complying to the tax standards and hence the organized players are not able to benefit from the shift of market from unorganized to organized. But once E-way bill gets implemented, benefit would start getting accrued to the organized players. Volume growth in plywood is likely to be led by drivers such as shift towards organized segment post GST implementation, development of smart cities and rising urbanization. Company is also on track to expand its capacity in MDF and plywood to cater to incremental demand requirements.

- We tweak our estimates and arrive at a price target of Rs 322 based on 25x FY19 estimates. Volumes are likely to recover sharply from FY19 onwards and company plans to cater to improved demand going forward with higher value added products, increased outsourcing in plywood and new capacity in plywood and MDF. Owing to limited upside from the current levels, we maintain ACCUMULATE rating on the stock and would advise investors to look for declines to enter the stock.

Shares of GREENPLY INDUSTRIES LTD. was last trading in BSE at Rs.312 as compared to the previous close of Rs. 315.5. The total number of shares traded during the day was 13618 in over 399 trades.

The stock hit an intraday high of Rs. 320 and intraday low of 296.45. The net turnover during the day was Rs. 4123119.

Source : Equity Bulls

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