Hold Greenply Industries; target of Rs 140: ICICI Direct
ICICI Direct’s research report on Greenply Industries
Greenply Industries’ (GIL) topline grew 15.9% YoY to Rs 462.9 crore on account of strong growth in plywood business EBITDA margins contracted sharply by 300 bps YoY to 12.6% on account of weak realisation in the MDF segment PAT declined 1% YoY to Rs 35.7 crore mainly on lower-than-expected finance cost at -Rs 1.7 crore.
However, it could take 18-24 months for stability in MDF prices due to supply glut in MDF. While we expect MDF margins at 16-17% in medium term with better utilisation level and stability in MDF prices, it would still be below our initial expectation of 20-25%. Overall, we maintain our HOLD rating with a target price of Rs 140/share (~14x FY20E EPS).
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