Greenply Industries' (GIL) Q3FY21 performance was again about balance sheet than P&L as it focussed on credit correction while revenues were muted. The company has reduced its consolidated net debt by ~Rs. 113 crore in Q3FY21 to Rs. 82 crore driven by strong receivables collection and moving to stricter working capital control (at 60 days vs. 66 days in Q2 and 80 days in Q3FY20). GIL's Q3 consolidated topline at Rs. 340 crore was down 1.6% YoY owing to 3% YoY decline in plywood revenues at Rs. 310 crore (volumes, down 2.4%). EBITDA margins expanded 77 bps to 12.3%, owing to cost rationalisation. PAT at Rs. 25 crore was up 17% YoY, led by robust margins and lower interest costs on account of debt reduction.
Valuation & Outlook
GIL's stricter working capital control and cost has imparted strength to the balance sheet. We raise our FY21, FY22 earnings by 6%, 26%, respectively. The continued demand from Europe and newer areas will hold the key for Gabon, going ahead. Furthermore, while plywood is expected to grow handsomely on a benign base, GIL's relative market share, traction thereafter will be key for further rerating after sharp run up in share price of ~72% in last three months. We roll over to FY23 and maintain HOLD with a revised target price of Rs. 180 (16x FY23E earnings) vs. Rs. 95 earlier.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_GreenplyInds_CoUpdate_Feb21.pdf
Shares of GREENPLY INDUSTRIES LTD. was last trading in BSE at Rs.168.85 as compared to the previous close of Rs. 164.45. The total number of shares traded during the day was 351700 in over 7703 trades.
The stock hit an intraday high of Rs. 178.55 and intraday low of 159.3. The net turnover during the day was Rs. 59027189.