greenply industries result updated

8/3/2019 Greenply Industries Result Updated

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Please refer to important disclosures at the end of this report 1

Particulars (` cr) 3QFY2012 2QFY2012 %chg (qoq) 3QFY2011 %chg (yoy)

Net sales 418.7 413.6 1.2 316.9 32.1

EBITDA 43.3 36.7 18.0 28.2 53.8

EBITDA margin (%) 10.4 8.9 147bp 8.9 146bp

Net profit 14.1 10.1 39.6 7.2 96.0

Source: Company, Angel Research

Greenply Industries (GIL) registered strong top-line growth in 3QFY2012.

The company’s net sales grew by 32.1% yoy and 1.2% qoq to ` 419cr.

GIL reported 146bp yoy expansion in OPM to 10.4% mainly due to lower raw

material costs. OPM would have expanded further but the company reportedforex loss to the tune of ` 7cr during the quarter. Net profit increased by 96.0%

yoy to ` 14cr. We believe the company is well placed to benefit from its laminate

capacity expansion, improved utilisation levels of the MDF plant and expansion in

the plywood segment. Hence, we maintain our Buy view on the stock.

Top line posts strong growth yoy: For 3QFY2012, GIL’s top line grew by 32.1%

yoy to ` 419cr mainly due higher utilsation in the MDF segment during the quarter

and robust growth of 21.4% and 11.8% yoy in plywood and laminate segments.

The company going ahead will hedge their forex exposure for the coming

quarters and thus we expect forex loss to be minimal which will result in better

margin and profitability going ahead.

Outlook and valuation: We believe the concerns related to the MDF segment

have receded considerably. Hence, higher utilisation levels in the MDF

segment will aid in improving GIL’s overall margins on a qoq basis going

ahead. The MDF segment is expected to achieve 60% utilisation in FY2012.

Further, the company is well placed to benefit from 1) its laminates capacity

expansion, which increased nearly two-folds in FY2010 and is expected to

achieve 100%+ utilisation in FY2012 and 2) expansion of its plywood

capacity by 3.75mn sq. ft., which is expected to contribute around ` 45cr to

FY2012 top line. At ` 211, the stock trades at 5.9x FY2013E earnings.

We maintain our Buy rating with a revised target price of `285, valuing the

stock at 8x FY2013E earnings.

Key financials

Y/E March (` cr) FY2010 FY2011 FY2012E FY2013E

Net Sales 871 1,217 1,526 1,800

% chg 20.2 39.6 25.4 18.0

Net Profit 49.6 25.1 50.3 86.0

% chg 32.9 (49.4) 100.6 70.9

FDEPS (Rs) 20.5 10.4 20.9 35.7

EBITDA Margin (%) 11.6 9.0 10.3 11.1

P/E (x) 9.4 20.3 10.1 5.9

P/CEPS (x) 6.5 7.7 5.2 3.8

RoE (%) 21.9 8.4 14.5 21.0

RoCE (%) 13.7 8.8 12.4 16.2

P/BV (x) 1.7 1.6 1.4 1.1

EV/Sales (x) 1.0 0.8 0.7 0.5

EV/EBITDA (x) 8.5 9.3 6.5 4.9 Source: Company, Angel Research

BUYCMP ` 211

Target Price ` 285

Investment Period 12 Months

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters 55.0

MF / Banks / Indian Fls 0.1

FII / NRIs / OCBs 10.7

Indian Public / Others 34.2

Abs. (%) 3m 1yr 3yr

Sensex (0.3) (5.5) 90.5

Greenply (1.2) 12.7 352

5

17,605

5,326

GRPL.BO

MTML@IN

509

0.6

245/133

2,916

Laminates

Avg. Daily Volume

Market Cap ( ` cr)

Beta

52 Week High / Low

Face Value ( ` )

BSE Sensex

Nifty

Reuters Code

Sharan Lillaney

Tel: 022-3935 7800 Ext: [email protected]

Greenply Industries

Performance Highlights

3QFY2012 Result Update | Laminates

February 3, 2012



Greenply Industries | 3QFY2012 Result Update

February 3, 2012 2

Exhibit 1: 3QFY2012 performance highlights

Particulars (` cr) 3QFY2012 3QFY2011 %chg (yoy) 2QFY2012 %chg (qoq)

Net Sales 418.7 316.9 32.1 413.6 1.2

Total Expenditure 375.3 288.7 30.0 376.9 (0.4)EBITDA 43.3 28.2 53.8 36.7 18.0

OPM (%) 10.4 8.9 146bp 8.9 147bp

Depreciation 11.9 10.4 14.3 11.5 2.8

EBIT 31.5 17.8 76.9 25.2 25.0

Interest 15.4 9.3 65.0 13.2 15.9

Other Income - - - 0.0 -

PBT 16.1 8 89.8 11.9 35.1

Tax 2.0 1.3 55.9 1.8 -

Net Profit 14.1 7.2 96.0 10.1 39.6

NPM (%) 3.4 2.3 110bp 2.4 93bp

Diluted EPS (Rs) 5.8 3.0 96.0 4.2 39.6


Revenue up 32.1% yoy due to strong volume growth: For 3QFY2012, GIL’s top

line reported 32.1% yoy growth to ` 419cr mainly on the back of laminate capacity

expansion, higher capacity utilisation in the MDF segment and increased

realisation during the quarter.

The plywood segment reported 114% capacity utilisation and realisation increased

to ` 244/sq. mt. from ` 232/sq. mt. qoq and ` 217/sq. mt. yoy. The segment

witnessed a 10.4% yoy increase in volumes.

The laminate segment reported an average of 108% capacity utilisation. Average

realisation of laminates increased to ` 556/sheet in 3QFY2012 from ` 538/sheet in

2QFY2012 and ` 488/sheet in 3QFY2011. The segment witnessed a 15.9% yoy

increase in volumes.

The MDF segment witnessed it’s highest-ever utilisation during 3QFY2012.

The segment’s utilisation stood at 69%, with production volume of 31,260m 3 and

sales volume of 31,178m3.




February 3, 2012 3

Exhibit 2: Robust growth in sales


OPM expands yoy on the back of higher utilisation

The company’s EBITDA improved by 53.8% yoy to ` 43cr on the back of higher

revenue during the quarter. OPM for the quarter expanded by 146bp yoy due to

higher utilisation in the MDF segment and lower raw material costs as a

percentage to sales. Forex losses stood at ` 7cr vs. a profit of ` 0.4cr in 3QFY2011.

The company will hedge forex exposure relating to business over the coming

quarters and thus minimizing forex loss. Depreciation/appreciation of one rupee

vs. the euro can result in loss/profit of ` 2cr to the company.

Exhibit 3: OPM improving on the back of higher utilisation


317350 353

414 419

0

5

10

15

20

25

30

35

4045

50

0

50

100

150

200

250

300

350400

450

3QFY2011 4QFY2011 1QFY2012 2QFY2012 3QFY2012

Net Sales (LHS) Growth (qoq) Growth (yoy)

( ` cr) (%)

8.9

8.1

10.8

8.9

10.4

0

2

4

6

8

10

12


(%)




February 3, 2012 4

PAT increases on account of higher revenue, margin expansion

GIL’s net profit increased by 96.0% yoy to ` 14cr ( ` 7cr), largely due to higher

revenue during the quarter. PAT margin also improved yoy by 110bp to 3.4% on

the back of yoy expansion in OPM.

Exhibit 4: PAT trend


7.2 5.9

13.0

10.1

14.1

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0


Net Profit NPM

( ` cr) (%)




February 3, 2012 5

Investment arguments

Banking on MDF and laminates

GIL has forayed into the lucrative, high-growth MDF market, with the largest MDF

plant in India (1,80,000m3/year capacity), while benefiting from its strong

expansion in laminates (88% capacity expansion). GIL is witnessing strong demand

for its laminate products, with both its new production lines running at full capacity.

The MDF opportunity is especially huge – MDF constitutes 20% of wood panel

consumption in India, while plywood constitutes 80% – the reverse holds

true globally. China alone consumes about 10mn–11mn m3/year of MDF vs.

0.6mn m3/year in India. Going forward, with a strict control on the issue of new

plywood licenses and a 5–7% CAGR in panel demand, MDF is likely to meet this

demand, translating into a 25–30% CAGR for MDF. Moreover, even out of the

present consumption, 80% is being met through imports, which GIL can substitute,

given the high freight costs and 25% anti-dumping duty on imports.

Strong brand, high ad spend and massive distribution

GIL has leading plywood and laminates brands, supported by ad spend as high as

4.3% of sales. The company also has the largest distribution network of over

15,000 dealers. These advantages underpin the strong RoE profile of the

company's brand-driven business model.

Outlook and valuation

We believe the concerns related to the MDF segment have receded considerably with the segment achieving 69% utilsation in 3QFY2011. Hence, higher utilisation

levels in the MDF segment will aid in improving GIL’s overall margins on a qoq

basis going ahead. The MDF segment is expected to achieve 60% utilisation in

FY2012. Further, the company is well placed to benefit from 1) its laminate

capacity expansion, which increased nearly two-folds in FY2010 and is expected to

achieve 100%+ utilisation in FY2012 and 2) expansion of its plywood capacity by

3.75mn sq. ft., which is expected to contribute around ` 45cr to FY2012 top line. At

` 211, the stock trades at 5.9x FY2013E earnings. We maintain our Buy rating with

a target price of `285, valuing the stock at 8x FY2013E earnings.

Exhibit 5: Key assumptionsEstimates

(%) FY2012 FY2013

Sales growth 25.4 18.0

Capacity utilisation – Plywood 115.0 115.0

- Laminates 110.0 115.0

- MDF 60.0 85.0

Operating margin 10.3 11.1





February 3, 2012 6

Profit and Loss Statement

Y/E March (` cr) FY2009 FY2010 FY2011 FY2012E FY2013E

Gross sales 830 980 1,378 1,702 2,000

Less: Excise duty 105 108 161 176 200Net Sales 725 871 1,217 1,526 1,800

Other operating income -

Total operating income 725 871 1,217 1,526 1,800

% chg 33.8 20.2 39.6 25.4 18.0

Total Expenditure 646 771 1,107 1,368 1,601

Net Raw Materials 409 478 692 855 1,026

Other Mfg costs 38 52 89 84 99

Personnel 59 77 103 137 162

Other 141 164 224 293 313

EBITDA 79 101 110 158 200

% chg (2.1) 27.7 8.8 43.8 26.8

(% of Net Sales) 10.9 11.6 9.0 10.3 11.1

Depreciation (17) (22) (41) (47) (49)

EBIT 62 79 69 111 151

% chg (8.3) 27.3 (12.8) 61.6 36.1

(% of Net Sales) 8.5 9.0 5.6 7.3 8.4

Interest & other Charges (20) (24) (38) (48) (43)

Other Income 2 2 0 0 0

(% of PBT) 0.0 0.0 0.0 0.0 0.0

Share in profit of Associates - - - - -

Recurring PBT 44 57 31 63 108

% chg (11.6) 28.5 (45.8) 103.9 70.9

Extraordinary Expense/(Inc.) - - - - -

PBT (reported) 44 57 31 63 108

Tax 7 7 6 13 22

(% of PBT) 15.9 13.0 19.5 20.0 20.0

PAT (reported) 37 50 25 50 86

Add: Share of earnings of associate - - - - -

Less: Minority interest (MI) - - - - -

Prior period items - - - - -

PAT after MI (reported) 37 50 25 50 86ADJ. PAT 53 42 34 77 86

% chg 37.6 (20.5) (20.5) 129.6 11.3

(% of Net Sales) 7.4 4.9 2.8 5.1 4.8

Basic EPS (`) 21.9 22.4 10.4 20.9 35.7

Fully Diluted EPS (̀ ) 21.9 20.5 10.4 20.9 35.7

% chg (3.7) 2.2 (53.7) 100.6 70.9




February 3, 2012 7

Balance Sheet


SOURCES OF FUNDS

Equity Share Capital 8 11 12 12 12Preference Capital - - - - -

Reserves& Surplus 172 261 311 357 439

Shareholders’ Funds 181 272 323 369 451

Minority Interest - - - - -

Total Loans 258 407 520 520 470

Deferred Tax Liability 13 19 25 28 28

Total Liabilities 451 699 868 917 949

APPLICATION OF FUNDS

Gross Block 270 632 724 775 810

Less: Acc. Depreciation 74 92 124 171 219

Net Block 196 539 601 605 591

Capital Work-in-Progress 52 13 11 - -

Goodwill 3 3 3 3 3

Investments 2 4 9 9 9

Current Assets 386 426 530 667 772

Cash 16 19 13 7 7

Loans & Advances 69 56 74 74 74

Inventories 166 200 229 305 360

Debtors 135 151 213 280 330

Other - - - - -

Current liabilities 188 288 286 366 426

Net Current Assets 198 137 244 300 346

Mis. Exp. not written off - 1 1 - -

Total Assets 451 699 868 917 949




February 3, 2012 8

Cash Flow Statement


Profit before tax 44 57 31 63 108

Depreciation 17 22 41 47 49Change in Working Capital (26) 49 (94) (73) (43)

Less: Other income 2 2 0 0 0

Direct taxes paid 7 7 6 13 22

Cash Flow from Operations 26 118 (28) 24 92

Inc./ (Dec.) in Fixed Assets (90) (324) (90) (40) (35)

Inc./ (Dec.) in Investments 3 (2) (5) - -

Inc./ (Dec.) in loans and adv. (18) 13 (18) - -

Other income 2 2 0 0 0

Cash Flow from Investing (103) (311) (113) (40) (35)

Issue of Equity - 46 29 - -

Inc./(Dec.) in loans 87 149 112 - (50)

Dividend Paid (Incl. Tax) (3) (4) (4) (4) (4)

Others (0) 4 (2) 14 (3)

Cash Flow from Financing 84 195 135 10 (57)

Inc./(Dec.) in Cash 7 3 (6) (6) 0

Opening Cash balances 9 16 19 13 7

Closing Cash balances 16 19 13 7 7




February 3, 2012 9

Key Ratios

Y/E March FY2009 FY2010 FY2011 FY2012E FY2013E

Valuation Ratio (x)

P/E (on FDEPS) 9.6 10.3 20.3 10.1 5.9P/E (on basic, reported EPS) 9.6 9.4 20.3 10.1 5.9

P/CEPS 6.6 6.5 7.7 5.2 3.8

P/BV 2.0 1.7 1.6 1.4 1.1

Dividend yield (%) 0.7 0.7 0.7 0.7 0.7

Market cap. / Sales 0.5 0.5 0.4 0.3 0.3

EV/Sales 0.8 1.0 0.8 0.7 0.5

EV/EBITDA 7.6 8.5 9.3 6.5 4.9

EV / Total Assets 1.3 1.2 1.2 1.1 1.0

Per Share Data (`)

EPS (Basic) 21.9 22.4 10.4 22.4 35.6

EPS (fully diluted) 21.9 20.5 10.4 22.4 35.6

Cash EPS 32.0 32.4 27.4 41.7 55.8

DPS 1.5 1.5 1.5 1.5 1.5

Book Value 106.4 123.3 133.9 154.5 188.3

Dupont Analysis

EBIT margin 8.5 9.0 5.6 8.1 9.4

Tax retention ratio 84.1 87.0 80.5 80.0 80.0

Asset turnover (x) 1.9 1.6 1.6 1.6 1.7

ROIC (Post-tax) 13.7 12.3 7.2 10.6 13.1

Cost of Debt (Post Tax) 7.7 6.2 6.6 7.5 6.9

Leverage (x) 1.3 1.5 1.5 1.5 1.1

Operating ROE 21.7 21.3 8.2 15.2 20.3

Returns (%)

ROCE (Pre-tax) 15.8 13.7 8.8 13.0 16.1

Angel ROIC (Pre-tax) 17.6 15.0 9.1 13.3 16.4

ROE 22.7 21.9 8.4 15.5 20.8

Turnover ratios (x)

Asset Turnover (Gross Block) 2.9 1.9 1.8 1.9 2.0

Asset Turnover (Net Block) 3.9 2.3 2.1 2.4 2.6

Asset Turnover (Total Assets) 1.9 1.5 1.6 1.6 1.7

Operating Income / Invested Capital 1.9 1.6 1.6 1.6 1.7Inventory 78 77 64 66 70

Receivables (days) 58 60 55 61 64

Payables (days) 82 97 83 77 79

WC cycle (ex-cash) (days) 81 63 52 65 68

Solvency ratios (x)

Gross debt to equity 1.4 1.5 1.6 1.4 1.0

Net debt to equity 1.3 1.4 1.6 1.3 0.9

Net debt to EBITDA 3.1 3.9 4.6 3.0 2.2

Interest Coverage (EBIT / Interest) 3.1 3.3 1.8 2.4 3.6




February 3, 2012 10

Research Team Tel: 022 - 3935 7800 E-mail: [email protected] Website: www.angeltrade.com

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Disclosure of Interest Statement Greenply Industries

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns) : Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to 15%) Sell (< -15%)

greenply industries result updated

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