Reduce Greenpanel Industries, lower target price to Rs 210: HDFC Securities

HDFC Securities has a Reduce call on Greenpanel Industries with a lowered target price of Rs 210 (Rs 255 earlier). The current market price of Greenpanel Industries is Rs 235.1. Greenpanel, incorporated in 2017, is a Small Cap company with a market cap of Rs 2925.28 crore, operating in Building Materials sector.

Greenpanel Industries Ltd. key Products/Revenue Segments include Fibre Board, Plywood, Export Incentives and Other Operating Revenue for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-03-2024, the company has reported a Consolidated Total Income of Rs 403.99 Crore, up 4.38 % from last quarter Total Income of Rs 387.04 Crore and down -10.21 % from last year same quarter Total Income of Rs 449.93 Crore. Company has reported net profit after tax of Rs 29.80 Crore in latest quarter.

The company?s top management includes Mr.Shiv Prakash Mittal, Mr.Shobhan Mittal, Ms.Mahesh Kumar Jiwrajka, Mr.Salil Kumar Bhandari, Mr.Arun Kumar Saraf, Ms.Shivpriya Nanda. Company has S S Kothari Mehta & Co as its auditors. As on 31-12-2024, the company has a total of 12 Crore shares outstanding.

Investment Rationale
HDFC Securities anticipate MDF volume growth to pick up in FY26, driven by the new plant's ramp-up, projecting an 8% MDF volume CAGR from FY24-27E (17% CAGRfrom FY25-27E). With significant industry capacity expansion already observed, the brokerage expects improved industry capacity utilization in the coming years, leading to better pricing and margins. They forecast an 8% EBITDA margin for the MDF segment in FY25E, increasing to 14% and 18% in FY26E and FY27E, respectively. However, considering below-average market demand and elevated timber prices, HDFC Securities has reduced the APAT estimates by 37%, 18%, and 18% for FY25E, FY26E, and FY27E, respectively, placing our topline and bottomline estimates ~7-9% and ~30-40% below consensus for FY25-27E. We are forecasting slower new plant ramp-up and margin recovery than consensus. Consequently, they maintain a REDUCE rating on Greenpanel Industries with a lower target price of Rs 210 per share (20x Sep-26E EPS).