Greenply Industries - Dominant Player In An Industry With Tailwinds: IDBI Capital Initiates Coverage

IDBI Capital Report

Greenply Industries Ltd. is a proxy play on rising real estate sales in India as it is second largest plywood company in India and is on the verge of commissioning a 240,000 cubic metre medium-density fibreboard plant in Vadodara, Gujarat.

We expect the plant to gradually ramp up production during FY24. Post this expansion, we forecast Greenply's sales/Ebitda/net profit to grow at a compound annual growth rate of 18%/45%/35%, respectively, over FY23-25E.

With this plant, the company will complete its major capex cycle. Hence, we expect its free cashflows to remain strong over FY24-25E and net debt is likely to fall sharply during the same period.

Lastly, valuation at (price-to-earnings of 10 times FY25) is inexpensive in our view (Century Plyboards India Ltd. trades at 20 times).

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