Greenlam Industries - Q1 FY22 Result Report - YES Securities

(Rating: ADD, TP: Rs1,452, Upside: 6%)

- Q1FY22 was impacted due to regional lockdowns caused by 2nd wave of COVID-19 in domestic markets. However, with normalcy returning from July'21 (laminates at ~100% & veneers at ~80% of pre-2nd wave of COVID-19), we believe demand to bounce back in coming quarters. Additionally, demand in export markets should continue to remain sturdy.

- Along with domestic laminates industry set to grow by 8-10% in coming years, industry is witnessing a sharp shift from unorganized to organized segment due to rampant rise in input cost coupled with higher working capital requirement. Hence, Greenlam is expected to outperform industry growth by reporting 14% volume growth in laminates segment over FY21-FY23E. Moreover, Greenlam is also gaining marketshare from global unorganized players in export markets which will enable the company to strengthen their global footprints. Therefore, we expect company's total revenue to grow by 18% CAGR over FY21-FY23E.

- We reckon, better pricing power coupled with higher utilizations; company's operating margins are likely to come in at 14.6%/15% in FY22E/FY23E respectively. Hence EBITDA is expected to grow by 20.3% CAGR over FY21-FY23 to Rs2,507 Mn.

Valuation:

At CMP, Greenlam Industries is trading at P/E(x) of 23.4x on FY23E EPS of Rs58.1. We have valued the company at 25X on FY23E EPS arriving at a target price of Rs 1,452 (previous target of Rs 1,356), translating into an upside of 6%. We therefore change our rating from "BUY" to "ADD".

Shares of Greenlam Industries Ltd was last trading in BSE at Rs. 1377 as compared to the previous close of Rs. 1361.15. The total number of shares traded during the day was 3539 in over 580 trades.

The stock hit an intraday high of Rs. 1417.6 and intraday low of 1358.75. The net turnover during the day was Rs. 4931187.

Source : Equity Bulls

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