Result Update: Century Plyboards Ltd - BUY - TP Rs.323 - Kotak

Century Plyboard results were ahead of our estimates. Growth in revenues was largely led by volume gains in plywood, laminate along with MDF plant ramp up. MDF plant had commissioned during Q3FY18 and is likely to witness improved capacity utilization going forward. However, the volume gain in plywood segment was offset to some extent by pricing pressure as well as lower revenues from commercial vineer. Pricing and margin pressure continued in MDF during Q1FY19 also owing to increased competition. We believe that growth going ahead is likely to be led by volume gains in each segment and pricing growth may remain largely subdued.

Key highlights

- Revenue growth of 22.5% YoY was in line with our estimates and was largely led by volume gains in plywood and laminate along with MDF plant ramp up. Margins have also improved with MDF revenues forming 22% of overall revenues with better margins than plywood. Lower than expected depreciation charges led to net profit coming ahead of our estimates.

Valuation and outlook

- At Rs 250, stock is currently trading at 25x/20.9x P/E and 15.3x/13.1x EV/EBITDA on FY19/20 estimates. We tweak our estimates to factor in lower margins in MDF along with changed depreciation policy. We maintain our price target of Rs 323 based on 27 x FY20 estimated earnings. We continue to maintain BUY recommendation on Century Plyboards as we believe that with increase compliance towards e-way bill implementation, volumes in plywood and laminate are likely to witness improvement. Capacity ramp up in MDF will also aid revenue growth.

Shares of CENTURY PLYBOARDS (I) LTD. was last trading in BSE at Rs.249 as compared to the previous close of Rs. 248.85. The total number of shares traded during the day was 14504 in over 379 trades.

The stock hit an intraday high of Rs. 253 and intraday low of 248.1. The net turnover during the day was Rs. 3637005.

Source : Equity Bulls

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