When I learnt in September 2014 that Saurabh Mukherjea Of Ambit is bullish on Century Ply on the basis that the company will “deliver 52% EPS CAGR over FY 2014-16 backed by volume traction and margin expansion” I immediately rushed off an alert with the suggestion that we should also pocket the stock before the savvy investors do.
In hindsight, Century Ply is/ was a no-brainer stock given the scope for branded plywood products in the Country (especially in the wake of NAMO’s dream of urbanization) and the Company’s own dominance over the market place.
The other impressive factors about Century Ply are that over the past 10 years, the company has reported a 25% CAGR in income and profits, which is quite commendable. Also, the promoters hold nearly 75% of the equity. The company has richly rewarded investors with a 7000% return since the IPO in 1997, apart from uninterrupted dividends.
After Saurabh, Sharekhan recommended a buy on 4th December 2014, when the stock was at Rs. 168.
Well, today, Century Ply reported block-buster Q3FY15 results. The net profit surged 110 percent to Rs 41.4 crore from Rs 19.7 crore, in the same quarter last year. The net sales surged 25.8 percent to Rs 381.8 crore as against Rs 303.5 crore, YOY. The EBITDA was up 102 percent at Rs 69 crore against Rs 34 crore, YOY.
Delirious investors thronged the counter, sending the stock surging nearly 12% to an all-time high of Rs. 192.
Saurabh’s followers are looking at gains of nearly 90% in just about the four months that have elapsed while Sharekhan’s followers are sitting on a pretty gain of 14% for a month’s work.
As to the future prospects, Century Ply’s Chairman, Sajjan Bhajanka, came on CNBC TV18 today to state that he expected the EBITDA margins to be maintained at 16-17 percent. He also pointed out that traditionally, from the last 17 years, the Company has been maintaining 25 percent growth. He said that this is a “very sacrosanct target” and that it would be met by either new acquisition or by the expansion of capacity in the existing unit or by starting new units.