Greenlam Industries Ltd - Q3 FY21 Result Update - YES Securities

(Rating: BUY, TP: Rs1,190, Upside: 41%)

- Although net sales for Greenlam during Q3FY21 was in-line with our estimates (decline of ~6.5% y/y), company delivered healthy beat on operational performance as EBITDA/PAT stood 17.5%/31.2% higher than our estimates and witnessed growth of 6% y/y and 10% y/y respectively. EBITDA margins for laminate division witnessed extremely strong improvement of 140 bps y/y and 360 bps q/q - scaling to 19.8% on the back of consumption of low cost inventory and operating leverage.

- Going ahead, we estimate sales/EBITDA/PAT CAGR of 16%/22%/38% over FY21E-FY23E. Further, we expect de-leveraging drive of Greenlam to continue despite cash outgo towards commissioning of Andhra plant - expect net debt to decline from Rs 2.63 bn to Rs 0.7 bn over FY20-FY23E.

- Assigning DCF derived P/E multiple of 23x on FY23E EPS of Rs 52, we maintain our TP of Rs 1,190 and we maintain our BUY rating on the stock. Key re-rating trigger - positive contribution from floors/doors segment with pick of real estate market.

Shares of Greenlam Industries Ltd was last trading in BSE at Rs.840.3 as compared to the previous close of Rs. 825.7. The total number of shares traded during the day was 730 in over 78 trades.

The stock hit an intraday high of Rs. 850.35 and intraday low of 831.35. The net turnover during the day was Rs. 612317.

Source : Equity Bulls

Keywords