Greenply Industries - Attractive Valuation, Potential Dark Horse: Anand Rathi
With significant growth momentum in real estate, especially semi-urban and rural, it expects good demand for wood panels.
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Anand Rathi Report
Healthy plywood growth and its asset-light model provides Greenply Industries Ltd. flexibility to raise volumes on mounting demand. The Sandila (Uttar Pradesh) manufacturing plant (13.5 million square metre) commissioned in Q1 FY23 is near optimum utilisation and commissioning of the 7.5 million square metre, capacity at Hapur, UP (a partner facility) is expected soon (March 2023).
An 11.4% volume compound annual growth rate expected over FY22-25. Prices of chemicals have declined, and high timber prices have started to cool. Hence, margins are expected swing up.
Medium Density fibre capacity (240,000 cubc metres) at Vadodara is expected to begin by Q1 FY24. Robust demand led to domestic manufacturers scaling up capacities, besides increasing imports. This led to margins steeply sliding from highs of 30-32%; 23-25% however, seems sustainable.
Gabon operation traversing a rough patch; yet to pick up pace. Expected input-cost easing would expand margins.
Risks: Demand slowdown, rising competition, reasonably priced raw material.
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