Greenpanel Industries Q1 Review - Results Below Estimate While Maintain MDF Realisation: Prabhudas Lilladher

Prabhudas Lilladher Report

Greenpanel Industries Ltd. maintained its medium density fibre volume growth guidance between 12-15% with MDF Ebitda margin between 23-25% for FY24, even after 7.4% decline in MDF volume in Q1 FY24 (considering strong traction in volume in H2 FY24).

Plywood is also expected to deliver 10% volume growth in FY24 despite severe fall (-37.1% YoY on higher base) in Q1 FY24. Consolidated Ebitda margin contracted to 17% with oneoff expenses like-

1. maintenance shutdown of MDF plant,

2. increase in logistics expenses,

3. higher advertising and promotion expenses, while excluding one off Ebitda margin was ~20% in Q1 FY24.

Higher timber prices continue to impact margins in coming quarters while management remains confident of compensating it with higher volume growth.

We are maintaining our positive view considering 12.7% MDF volume growth and 22.1% Ebitda margin in MDF segment (MDF contributes ~86% rev.) in FY24.

We estimate FY23-25E revenue/Ebitda/profit after tax compound annual growth rate of 8.9%/2.8%/0.7%, with MDF volume CAGR of 17.4% and Ebitda per cubic metre of around Rs 6,060 in FY25.

Greenpanel is well-positioned for growth and creation given its-

1. leading position in domestic MDF segment,

2. strong growth prospects in domestic MDF demand,

3. planned capacity increase of 35% over FY23-25 and

4. extensive distribution network.

We have tweaked our FY24/FY25 earnings to adjust one-off expenses in Q1 FY24 and adoption of new tax regime by Greenpanel.

We the stock at 21 times FY25 earnings per share and arrive at target price of Rs 459 (Rs 455 earlier). Maintain ‘Buy’ rating.

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