Buy Greenply Industries; target of Rs 110: Anand Rathi

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Anand Rathi 's research report on Greenply Industries

Marred by poor sales/margin and a one-off, Greenply’s Q4 FY20 was weak. On an anticipated weak FY21, we expect a bounce back only in FY22 on improved consumer sentiment for home renovation/ purchases. The face veneer backward integration in Gabon will play its role in RM sourcing at reasonable prices even as the balance sheet remains strong. Several cost reduction steps may cushion margins.

Outlook

Considering Greenply’s leading position in plywood, backward-integration, strong balance sheet and attractive valuations (11x FY22e P/E) after the 50% fall in its stock price since Jan’20, we upgrade it to a Buy, with a lower target of `110 (14x FY22e P/E), earlier `170. Domestic demand recovery and a ramp-up at Gabon are key monitorables.

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