Greenply Industries Research Reports By IIFL & GEPL

IIFL:

“Greenply Industries (GIL) is a leading interior infrastructure company and manufactures Plywood/ Medium‐density fibreboard (MDF) with an installed capacity of 32.4mn sqm/0.18mn cbm, respectively. GIL is betting big on the increase in usage of MDF on account of wide acceptance/awareness of readymade furniture. To drive growth, GIL will set up a new plant in Andhra Pradesh by mid‐FY19 with a capex of Rs6.0b ‐ Rs6.5bn with an installed capacity of 0.36mn cbm. GIL is also foraying into new product categories like natural veneer, and trading in wall paper. GIL, under Greenterior brand, has given guidance of garnering Rs500cr revenue in the next five years, starting with wallpaper trading. We expect revenue/PAT CAGR of 11.5%/16.4%, respectively, healthy operating cash flow of Rs3.6bn leading to a fall in D/E from 0.69x in FY15 to 0.46x in FY17E, improvement in ex‐cash working capital to 15.4% in FY17E from 17.2% in
FY15, improvement in pre‐tax RoCE by 314bps to 23.4% and increase in operating margin by 106bps over FY15‐FY17E, leading to a re‐rating of GIL’s valuations. We recommend BUY rating with a TP of Rs1,327 based on 22x PE and 12.6x EV/EBITDA FY17E.”

GEPL:

“At CMP of Rs910, Greenply Industries trades at 18 x its FY16E EPS. With GST implementation going ahead & robust product portfolio, company revenue & margins to improve in future. Management has guided for 10-12% revenue growth in FY16. We believe stock to trade at 21x its FY16E EPS of Rs51.1. We assign a BUY rating on the stock with a target price of Rs1,070, which implies 18% upside from current level.”

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