Road-show cum Analyst Meet Update
Institutional Equities
Greenply Industries
15 June 2015
Reuters: GRPL.BO; Bloomberg: MTLM IN
Positive Outlook Remains; Retain Buy
We had organised a road-show on Greenply Industries (GIL) on 11 June 2015. Mr. Shobhan
Mittal, joint managing director and chief executive officer, and Mr. V. Venkatramani, chief
financial officer, attended the road-show and subsequent analyst meet to discuss the
future performance and growth of the company. After both these events, we are positive
on the development of the company and future growth prospects in plywood and MDF
(medium density fibre) board divisions. The management has given revenue growth
guidance of 10%-12% for FY16 and GIL is also foraying into new product categories like
decorative veneer, face veneer and trading in wall paper. GIL, under Greenterior brand, has
given guidance of garnering Rs5,000mn revenue in the next five years, starting with
wallpaper trading. Under the MDF board segment, GIL has forayed into ultraviolet (UV)
coated boards and laminated flooring. Further, the management is betting on growth in the
plywood segment via outsourcing of products and also implementation of GST (Goods and
Services Tax) leading to a shift in consumers’ preference from the unorganised to the
organised segment, thereby boosting growth. In the MDF board segment, with increasing
awareness and acceptance of MDF boards in the manufacture of readymade furniture, GIL
will set up a new plant in Andhra Pradesh by mid-FY19 with a capex of Rs6.0bn-Rs6.5bn
with a tentative installed capacity of 3.0mn-3.6mn cbm, to drive growth. Likely
revenue/PAT CAGR of 12.4%/17.3% to Rs19,755mn/1,476mn, respectively, healthy
operating cash flow of Rs3.9bn leading to a fall in the D/E ratio from 0.7x to 0.4x, better
demand visibility for high RoCE MDF boards and higher outsourcing of plywood will
improve pre-tax RoCE by 282bps to 23.1% and increase operating margin by 108bps over
FY15-FY17E, leading to a re-rating of GIL’s valuation. We have retained Buy rating on GIL
with a target price of Rs1,407 based on 23x/13.1x P/E and EV/EBITDA, respectively, on
FY17E earnings.
Following are the key highlights:
 Value growth, realisation growth and outlook:
a) FY16: The management has given guidance of a 5%-7% volume growth and a 4%-5% value
growth. Total revenue growth is seen at 10%-12%. This will be mainly driven by increase in
capacity utilisation in the plywood segment from 102% in FY15 to 110%-115% and
increased outsourcing of plywood from 20.5% currently to 30% over the next three years. In
addition, the MDF board segment, which witnessed capacity utilisation of 89% in FY15, is set
to post 100% capacity utilisation. Operating margin is seen improving ~70bps-100bps on the
back of a better product mix, higher capacity utilisation and cost optimisation measures.
b) FY17: The management has given guidance of a 8%-10% volume growth and a 7%-8%
value growth. Total revenue growth is seen at 15%-18%. This will be mainly driven by the
increase in capacity utilisation in the plywood segment to 118%-120% and also growth in
outsourcing of plywood. In addition, in MDF board segment, capacity utilisation to likely to
further increase to 110%-115%. MDF board plant had witnessed capacity utilisation of 114%
in March 2015.
c) Capex: FY16 – Rs250mn maintenance capex and Rs500mn-Rs700mn advance payment for
new MDF board plant to be set up in Andhra Pradesh with a tentative installed capacity of
3.6mn cbm, which is likely to be commissioned by mid-FY19. FY17 – Rs250mn maintenance
capex and Rs1,000mn-Rs1,500mn on machinery for new MDF board plant. FY18 –
Rs3,000mn-Rs3,500mn for new MDF board plant. The total capex of new MDF plant
Rs6,000mn-Rs6,5000mn will be funded 50:50 or 60:40 via debt and internal accruals.
d) Net debt not to exceed Rs4,500mn: Gross debt as of FY15-end stood at Rs3,315mn, of
which Rs2,049mn is long term in nature and Rs1,266mn is short term. As per the
management, GIL will repay Rs1,800mn over FY15-FY19E and therefore net debt will
increase to Rs1,200mn over the same period. The debt for new plant will be Rs3,300mn.
Hence, peak net debt at any point of time will not be more than Rs4,500mn
(Rs1,200mn+Rs3,300mn), despite a huge capex of Rs6.0bn-6.5bn to be incurred for setting
up the new MDF board plant in Andhra Pradesh with a tentative installed capacity of 3.0mn3.6mn cbm, which is likely to be commissioned by mid-FY19. The D/E ratio is expected to
fall to 0.4x in FY19E from 0.7x in FY15.
e) Cash flow: The operating cash flow for FY15 stood at Rs1,269mn and is likely to generate
Rs3,994mn over FY15-FY17E. GIL requires Rs450mn for meeting maintenance and working
capital needs every year. The company will generate Rs2,850mn of free cash flow over
FY15-FY17E which will meet capex requirement for the new plant.
BUY
Sector: Building Products
CMP: Rs890
Target Price: Rs1,407
Upside: 58%
Jignesh Kamani, CFA
[email protected]
+91-22-3926 8239
Ruchita Maheshwari
[email protected]
+91-22-3926 8023
Key Data
Current Shares O/S (mn)
24.1
Mkt Cap (Rsbn/US$mn)
21.5/335.3
52 Wk H / L (Rs)
1,277/560
Daily Vol. (3M NSE Avg.)
17,809
One Year Indexed Stock Performance
230
210
190
170
150
130
110
90
70
50
Jun-14
Aug-14
Oct-14
Dec-14
Greenply Industries
Feb-15
Apr-15
Jun-15
NSE CNX NIFTY INDEX
Price Performance (%)
Greenply Ind.
Nifty Index
Source: Bloomberg
Please refer to the disclaimer towards the end of the document.
1M
6M
1 Yr
(11.4)
20.6
52.8
(3.4)
(2.9)
5.8
Institutional Equities
Exhibit 1: Financial summary
Y/E March (Rsmn) consolidated
Revenue
YoY (%)
EBITDA
EBITDA margin (%)
Reported PAT
Adj. PAT
Diluted EPS (Rs)
YoY (%)
RoE (%)
RoCE (%)
RoIC (%)
P/E (x)
EV/ EBITDA (x)
FY13
13,148
NA
1,770
13.5
829
829
34.4
NA
26.6
16.0
15.1
25.9
14.3
FY14
13,908
5.8
1,733
12.5
773
773
32.0
(6.8)
22.3
14.5
13.7
27.8
14.4
FY15
15,643
12.5
2,049
13.1
1,218
1,074
44.5
38.9
23.7
17.8
18.0
20.0
11.9
FY16E
17,542
12.1
2,433
13.9
1,223
1,223
50.7
13.9
22.6
16.8
16.4
17.6
9.9
FY17E
19,755
12.6
2,802
14.2
1,476
1,476
61.2
20.7
22.1
17.2
16.7
14.5
8.7
Source: Company, Nirmal Bang Institutional Equities Research

Plywood and allied product division:
a) The market size is ~Rs160bn-Rs170bn, of which 25% is organised and the rest is unorganised. Of the
25%, GIL has a market share of 30%, while overall market share is ~6% each for GIL and Centuryply.
b) GIL caters to four segments -luxury, premium, mid-premium and economy through Green Club,
Greenply, Optima Red and Ecotec, respectively. The company sells Ecotec brand through the
outsourcing route and rest of the brands are manufactured in-house.
c)
The price difference in these products is 10%. For instance, if Greenply product costs Rs100/mn sqm,
Optima Red will cost Rs90/mn sqm and Greenply Club will cost Rs120/mn sqm.
d) Volume in commercial brand Ecotec increased 34% in FY15, while the volume in Greenply and Optima
Red declined by 5% each. As per the management, high-end consumers are deferring purchases.
e) The average realisation for in-house manufactured plywood (premium) stood at Rs268/mn sqm
compared to Rs173/mn sqm for traded plywood, a ~40% difference.
f)
Increased contribution of outsourced plywood to improve RoCE: GIL made good inroads into
outsourcing of plywood and as a result, trading in plywood witnessed a 47.5% revenue growth in FY15.
The revenue contribution of outsourced plywood increased from 14.2% in FY14 to 20.5% in FY15, which
is expected to rise to 22.4% by FY17. The management has given guidance of a 30% revenue growth
over three years. The company is not increasing capacity in the plywood segment and will be totally
dependent on outsourcing. Incremental growth is expected to come from increased capacity utilisation from 102% to 120% over FY15-FY17E- and increased outsourcing.
Traded plywood reported a pre-tax RoCE of ~39% against 18% in case of manufactured plywood. As
incremental growth in plywood is expected to come from traded plywood, RoCE of plywood division is
likely to improve significantly. With increased contribution of outsourced plywood, we expect pre-tax
RoCE to improve from 17.3% in FY15 to 25.4% in FY17, which in turn will improve overall pre-tax RoCE
by 282bps to 23.1% by FY17E from 20.3% in FY15, despite higher capex in MDF boards which will not
yield any revenue in FY17.
g) Enough scope to improve manufactured capacity: At present, GIL outsources only Ecotec brand
while it manufactures all other brands. The company is planning to outsource Optima Red, which will free
up capacity for premium brands. Despite plywood capacity utilisation of 102% in FY15, GIL is expected
to report a healthy growth in premium manufactured plywood, subject to better demand.
h) As per the management, no capacity expansion will take place in plywood and the quantum of
outsourcing is set to increase from ~21% to 30% in the next three years.
2
i)
Plywood RoCE: Pre-tax RoCE in plywood stood at 17.3% as of FY15-end, which is expected to
increase to over 20% when the plant will run at optimal capacity of 120%.
j)
Plywood RoCE stood at 17.3% in FY15 against 21.8% in FY14 because of: a) The plant not operating at
optimum capacity, and b) The company is unable to pass on the rise in costs to consumers. Otherwise,
the company would have achieved RoCE similar to that of MDF boards, i.e. more than 20%.
Greenply Industries
Institutional Equities
k)
Raw material security in Myanmar: Myanmar is a major exporter of teak wood in the world, accounting
for ~75% of global market. Myanmar banned the export of timber from 1 April 2014, which increased face
veneer prices in India by ~25%. Indian timber is inferior to Myanmar timber and cannot serve as a
substitute. GIL’s timber pilling (face veneer) plant is operational in Myanmar since August 2014.
Myanmar has banned timber export, but export of face veneer is allowed. Therefore, GIL will be able to
source quality face veneer at lower prices, thereby improving the margins of its plywood division.
Following weak balance sheets and regulatory hurdles, players in the unorganised segment are not able
to set up their units in Myanmar, thereby giving an edge to GIL. Unlike Centuryply (which has its own
unit), GIL has set up an unit through the joint venture (JV) route in which both JV partners have invested
Rs280mn each for an installed capacity of 42msqm of face veneer. In addition, Centuryply set up a
facility in February 2014 and had around six-eight month advantage. Unlike GIL, Centuryply has an
installed capacity of 2.5x times GIL’s capacity.
GIL expects 100% capacity utilisation by the end of FY16. The company has set up face veneer capacity
as freight costs on face veneer is less than freight costs on wood, which will lead to savings in freight
costs. In addition, the unit also enjoys a five-year tax exemption. GIL requires ~20mn sqm of face veneer
against an installed capacity of 42mn sqm, which is sufficient to manufacture plywood at current capacity
and will require 24mn sqm at optimal utilisation of 120%. Out of total production, ~50% of the production
will be consumed by GIL while the balance low grade face veneer will be sold in the open market at a
premium. Because of a 15%-25% premium on face veneer in India, margins are expected to be high in
the near term. Premium quality output will be consumed by GIL, while mediocre quality will be sold in the
market. GIL registered a 24%-25% operating margin in face veneer, which is booked under its Myanmar
JV. On the other hand, Centuryply sells low to premium grades in the market. In FY15, Centuryply sold
Rs1,370mn of face veneer against Rs320mn sold by GIL. As Centuryply built up stock at a low price (raw
material benefit) and has added first-mover advantage with 2.5x capacity, realisation of Centuryply was
~28% higher than the realisation of GIL in FY15. The management has given revenue growth guidance
of Rs950mn-Rs1,000mn at optimum capacity utilisation.
l)
Procurement of raw materials: From the total requirement of raw materials, 15% is met through
imports, 75% through plantation and 10% from Nagaland timber (GIL is the only consumer and therefore
gets cheapest raw material in Nagaland).
m) Plywood margin to improve by FY17: As of now, the margin stands at 9.1% in FY15, which the
management expects to touch 11.0%-11.5% by FY17 when the plant will run at optimum capacity of
120%. Further, value-added products like natural veneer, defender plywood and structural plywood will
help in improving realisation for the segment. The company expects a 50bps-70bps improvement in
margin in FY16.
n) As per the management, the demand at the ground level continues to remain sluggish following the
slowdown in the real estate sector and rising inventories in that space.
o) GST implementation to benefit organised players: Organised players pay excise duty of 12.5% and
value-added tax or VAT of 12.5% - a total of ~25% tax. Earlier, the unorganised players used to underinvoice their products, which used to help them. However, with the implementation of GST, the
unorganised players will also fell under the purview of tax, which will benefit the organised players
significantly. As per the management, the difference between the prices of organised and unorganised
players is ~15%. With the implementation of GST, the dealers’ purchase prices will come down. This will
narrow down the price difference by 10% to 5%. Hence, the rapid shift from unorganised to organised
segment will take place, thereby driving growth for GIL.
p) Geographical break-up: Southern region: 30%, Northern region: 25%, Western region: 25% and
Eastern region: 20%.
q) FY16 volume and value growth guidance: The management has given a 7% volume growth guidance
of which 2% will be from in-house manufacturing activity and 5% from outsourcing. In addition, the
plywood segment is expected to register 4%-5% of value growth in FY16 against a flattish industry
growth.
r)
3
Greenteriors brand – a new venture: GIL expects to garner ~Rs5bn of revenue from this segment over
the next five years. Under Greenteriors, GIL is launching its first product - wallpaper. The company will
outsource the product totally and has already tied up with 10-12 manufacturers globally in the US,
Europe, China, Korea, etc. Wallpaper has Rs8bn market size in India. The company will use its own
existing distribution channel to sell the product. After wallpaper, GIL will roll out new related products in
the next few years. Typically, the margin is expected to be in the range of 22%-24% and is likely to
generate a business of Rs2bn over the next three years.
Greenply Industries
Institutional Equities

s)
Advertisement expenses: As per the management, branding in fragmented segments like plywood,
laminate, etc, is required as the dealer margin of GIL products is very low compared to margins of the
unorganised segment. GIL gives a dealer margin of 6%-8% for plywood and 8%-10% for laminates.
However, the unorganised segment gives a margin of 15%-18% and sometimes it can go to as high as
25%, depending on the kind of tie-up (because of tax evasion). Advertisement or brand building costs,
which currently stand at ~3% of net sales, induces the distributor to stock its products. GIL targets
carpenters, interior designers and architects to increase the visibility and awareness of its products. The
demand pull leads to an increase in the volume of products, which in turn compensates for low margin.
The company has planned ~Rs4,000mn of advertisement expenditure for the next 10 years.
t)
GIL charges a 6%-8% premium, better compared to other organised players (excluding Centuryply and
Marino Industry) at a 14%-15% premium compared to the unorganised segment.
MDF boards- next growth driver
a) The MDF board industry has a market size of ~Rs-14bn-Rs15bn, and only five organised players are
present like GIL, Action Shoes, Mangalam Timber, Rushil Décor and Shirdi Industry. As much as 65% of
the MDF board market is catered to by domestic players, of which 30% belongs to GIL and the balance
35% met through imports.
b) We expect MDF board business to provide better growth and healthy return ratios/cash flows in the
coming years as: 1) Activity in the commercial real estate sector has started growing, which will increase
the demand for MDF boards, 2) No new capacity is likely in the next two years in the MDF board segment,
thereby restricting supply (only GIL is setting up a new MDF board plant in Andhra Pradesh which is
expected to get commissioned by mid-FY19), and 3) GIL has introduced low density, cheap MDF board,
thereby preventing the consumers’ migration to cheap plywood. The management is quite hopeful of
improvement in MDF board capacity utilisation to 100%/110%-115% in FY16E/FY17E, respectively, from
89% in FY15. In March 2015, the plant had operated at a capacity of 114%.
c)
Readymade furniture industry to drive MDF growth: As per the management, ~Rs700bn is the size of
the furniture industry in India in which only Godrej, Featherlight and Blueplast are organised players whose
total combined size is less than Rs10bn. Because of the dominance of the unorganised segment, the use
of plywood is more compared to MDF board. As per the management, the furniture industry is expected to
become more organised in future. This will increase the use of automated plants to manufacture furniture.
An automated plant prefers to use MDF board over plywood to manufacture furniture. Plywood is
manufactured in a labour-intensive manner and hence it is not uniform while MDF boards are manufactured
in an engineered manner and therefore the quality is uniform, which leads to preference of MDF board over
plywood. In addition, 95% of MDF boards are extracted from raw logs compared to plywood utilising 60% of
wood, providing cost efficiency. Further, globally 15% of the readymade furniture is made from plywood and
85% from MDF boards or particle boards. Therefore, in anticipation of the next phase of growth in MDF
board segment, GIL is expanding capacity in MDF board division and increase outsourcing in the plywood
segment.
d) As per the management, the quality of MDF board and plywood is almost the same. For example, a
table made out of MDF board and plywood will have same lifespan (considering similar usage). It is
a myth that MDF board has a low density and therefore the furniture made out of MDF board will not
last long. As architects charge their fees as a percentage of project cost, they prefer expensive
materials like plywood. There are differences in manufacturing furniture out of plywood and MDF
board like: 1) MDF board can be used in a automated plant unlike plywood which is more labourintensive in nature, and 2) Instead of using nails for plywood, one has to drill holes and insert
screws in MDF board furniture. Apart from these two differences, the furniture made out of MDF
board and plywood will be the same.
e) Geographical break-up: Northern region: 55%, Southern region: 30%, Western region: 10% and Eastern
region: 5%.
f)
4
New MDF board plant in Andhra Pradesh likely by mid-FY19: In the MDF board segment, GIL has
planned a capex of ~Rs6.5bn (tentatively) to set up capacity in Andhra Pradesh. The tentative installed
capacity can be anywhere in the range of 3.0mn cbm-3.6mn cbm. The company set up 1.8mn cbm capacity
in Pantnagar, Uttarakhand, at a capex of Rs2.7bn. It bought 105acres of land at a cost of Rs185mn. The
company is in talks to buy machinery from two German companies. It is awaiting environmental approval
and expects the construction to begin in 2HFY16. It will take another three years for the plant to commence
production. Asset turnover is expected to be 1.4x-1.5x. Post separation of Telangana from Andhra
Pradesh, the latter doesn’t have many industries and hence to promote industrial development, Andhra
Pradesh may declare a tax holiday and give other benefits to support investment in the state. GIL will
benefit the most whenever such benefits are declared.
Greenply Industries
Institutional Equities
The break-even of the plant is attained when capacity utilisation hits 55%, which the management
expects to achieve in first full year of operations, which is FY20. In addition, 30% sales in South
India will get shifted to North India and the new plant will cater to South India demand, thereby
providing the market for new MDF board plant.
g) Adequate availability of power in Andhra Pradesh: The new MDF plant does not have power paucity
because Andhra Pradesh, after its separation from Telangana, has surplus power (as Hyderabad, the
highest power consuming state is now a part of Telangana). Thus, the company will enjoy uninterrupted
power supply and also the capex is lower.
h) As South India is the next big revenue contributor, (because of the rise in the number of nonresident Indians or NRIs who are using MDF boards as they are used to MDF board usage in
developed countries). MDF boards are more of B2C compared to other parts of India where it’s B2B.
Freight costs account for 10%-12% of total sales and therefore the company preferred to set up a
new MDF plant to cater to the needs of South India. This will help the company in saving costs.
In addition, no new players are setting up a MDF plant. Even, if new players venture to set up a MDF
plant, they requiretwo to three years to secure the licences to set up the plants. By that timeframe,
GIL will be able to set up its own manufacturing plant in South India. As of now, plywood market is
saturated with just a 8%-9% growth, while the management sees a 15%-20% growth in MDF boards
led by the consumers’ shifting from cheap plywood to MDF boards.
i)
MDF boards/plywood versus particle boards: Particle board market size is ~Rs30bn and is highly
unorganised. One of the major players, Novoboard GVK, has shut down operations. Associated Décor of
Bangalore is the next major player still operating. The two products, MDF board and particle board,
complement each other in the manufacture of readymade furniture. However, the application of particle
board is limited compared to MDF board and plywood and, therefore, they cannot replace MDF board or
plywood to a large extent. For the manufacture of economical furniture, particle board is used and for
expensive furniture, MDF board is used.
j)
Next phase of growth: As per the management, the next phase of MDF board growth will come from: a)
Increased share of organised segment in the furniture industry, and b) Launch of new value-added
products like pre-laminated MDF boards, MDF flooring and with a low base effect, they are expected to
show significant growth. The value-added mix to improve with new products, which will improve margin as
well. The MDF board flooring business was started in July 2014 and has clocked revenue of Rs90mn. The
management has given revenue growth guidance of Rs250mn-Rs300mn for FY16. The wooden flooring
market size is ~10mn sqm in volume terms and ~Rs5bn in value terms. Compared to China, the size is
30mn sqm plus imports. The management is hopeful of the category growing at a good rate going forward.
k)
Anti-dumping duty: The duty varies with different countries of origin. To cite an example, if the value of
MDF boards imported from Indonesia is US$275 and the government lays out minimum value of the
imported product at US$290, the Thailand producer needs to pay the difference of US$15. Despite antidumping duty, one can import MDF boards duty-free by changing the source of origin. Also, anti-dumping
duty is not applicable to many countries. Hence, removal of anti-dumping duty won’t have any adverse
impact in future. As per the management, the company does not face any threat from imports despite
pricing the product at a 6%-8% premium compared to a imported products, as GIL products are of high
quality with its MDF boards manufactured by using eucalyptus wood compared to imported MDF boards
consisting red wood, which is of an inferior quality.
l)
MDF products can easily replace plywood, particle boards and timber because of its multi-usage
property and economical rate.

Price hike: GIL has gone for price hike of 2.5% in plywood in October 2014 and 4% in MDF board in April 2015.

Tax rate: With one facility coming out of the purview of tax benefit, the tax rate is set to increase in FY16.
FY15: 13%, FY16: 23% and FY17: ~27%-28%.

The price differential:
 Plywood 19mm thickness: Premium (organised): Rs100-Rs110/sqft
Mid-segment (unorganised): Rs85-Rs90/sqft
Cheap: Rs40-Rs45/sqft
 MDF 19mm thickness: Rs45-Rs50/sqft
 Particle board 19mm thickness: 15% cheaper than MDF board.
5
Greenply Industries
400
200
0
30
25
20
15
10
5
0
6
Oct-04
Feb-05
Jun-05
Oct-05
Feb-06
Jun-06
Oct-06
Feb-07
Jun-07
Oct-07
Feb-08
Jun-08
Oct-08
Feb-09
Jun-09
Oct-09
Feb-10
Jun-10
Oct-10
Feb-11
Jun-11
Oct-11
Feb-12
Jun-12
Oct-12
Feb-13
Jun-13
Oct-13
Feb-14
Jun-14
Oct-14
Feb-15
Jun-15
Oct-04
Feb-05
Jun-05
Oct-05
Feb-06
Jun-06
Oct-06
Feb-07
Jun-07
Oct-07
Feb-08
Jun-08
Oct-08
Feb-09
Jun-09
Oct-09
Feb-10
Jun-10
Oct-10
Feb-11
Jun-11
Oct-11
Feb-12
Jun-12
Oct-12
Feb-13
Jun-13
Oct-13
Feb-14
Jun-14
Oct-14
Feb-15
Jun-15
(Rs)
1,400
1,200
1,000
(Rsbn)
40
35
8x
7x
8
6x
5x
4x
6
Oct-04
Feb-05
Jun-05
Oct-05
Feb-06
Jun-06
Oct-06
Feb-07
Jun-07
Oct-07
Feb-08
Jun-08
Oct-08
Feb-09
Jun-09
Oct-09
Feb-10
Jun-10
Oct-10
Feb-11
Jun-11
Oct-11
Feb-12
Jun-12
Oct-12
Feb-13
Jun-13
Oct-13
Feb-14
Jun-14
Oct-14
Feb-15
Jun-15
Oct-04
Feb-05
Jun-05
Oct-05
Feb-06
Jun-06
Oct-06
Feb-07
Jun-07
Oct-07
Feb-08
Jun-08
Oct-08
Feb-09
Jun-09
Oct-09
Feb-10
Jun-10
Oct-10
Feb-11
Jun-11
Oct-11
Feb-12
Jun-12
Oct-12
Feb-13
Jun-13
Oct-13
Feb-14
Jun-14
Oct-14
Feb-15
Jun-15
Institutional Equities
Exhibit 2: One-year forward P/E band
(x)
20
18
16
800
14x
14
12
10
600
12x
10x
8x
6x
4x
6
8
Median 8.2
4
2
0
Source: Nirmal Bang Institutional Equities Research
Exhibit 3: One-year forward EV/EBITDA band
(x)
12
10
Median 6.6
4
2
0
Source: Nirmal Bang Institutional Equities Research
Greenply Industries
Institutional Equities
Financials (standalone)
Exhibit 4: Income statement
Y/E March (Rsmn)
Net sales
Growth (%)
Raw material costs
Staff costs
Power & fuel costs
Other costs
Total expenditure
EBITDA
Growth (%)
EBITDA margin (%)
Other income
Extra-ordinary income
Interest costs
Gross profit
Growth (%)
Depreciation
Profit before tax
Growth (%)
Tax
Effective tax rate (%)
Net profit
Growth (%)
Extra-ordinary items
Adjusted PAT
Growth (%)
Exhibit 5: Cash flow
FY13
13,148
NA
6,935
966
833
2,645
11,378
1,770
NA
13.5
47
396
1,421
NA
321
1,099
NA
270
24.6
829
NA
829
NA
FY14
13,908
5.8
7,001
1,194
1,294
2,685
12,175
1,733
(2.0)
12.5
39
376
1,396
(1.8)
359
1,037
(5.7)
264
25.4
773
(6.8)
773
(6.8)
FY15
15,643
12.5
7,185
1,450
1,905
3,053
13,593
2,049
18.2
13.1
11
158
359
1,858
33.2
471
1,388
33.8
170
12.2
1,218
57.6
144
1,074
38.9
FY16E
17,542
12.1
9,989
1,771
824
2,525
15,108
2,433
18.8
13.9
37
303
2,168
16.6
527
1,640
18.2
418
25.5
1,223
0.4
1,223
13.9
FY17E
19,755
12.6
11,188
1,994
928
2,843
16,953
2,802
15.2
14.2
40
296
2,546
17.5
565
1,981
20.7
504
25.5
1,476
20.7
1,476
20.7
Y/E March (Rsmn)
EBIT
Inc./(dec.) in working capital
Cash flow from operations
Other income
Depreciation
Deferred liabilities
Interest paid (-)
Tax paid (-)
Dividend paid (-)
Extra-ordinary items
Net cash from operations
Capital expenditure (-)
Net cash after capex
Inc./(dec.) in short-term borrowing
Inc./(dec.) in long-term borrowing
Inc./(dec.) in preference capital
Inc./(dec.) in borrowings
(Inc.)/dec. in investments
Minority interest
Equity issue/(buyback)
Cash from financial activities
Others
Opening cash balance
Closing cash balance
Change in cash balance
FY14
1,375
(173)
1,202
39
359
91
(376)
(264)
(79)
970
(668)
302
244
(483)
(239)
(137)
(377)
(6)
152
72
(80)
FY15E
1,579
(234)
1,345
11
471
(28)
(359)
(170)
(84)
1,185
(667)
518
(214)
(172)
(386)
(191)
(577)
58
72
72
(0)
Source: Company, Nirmal Bang Institutional Equities Research
Source: Company, Nirmal Bang Institutional Equities Research
Exhibit 6: Balance sheet
Exhibit 7: Key ratios
Y/E March (Rsmn)
Equity
FY13
FY14
FY15
FY16E
FY17E
121
121
121
121
121
Reserves
2,997
3,685
4,719
5,857
7,249
Net worth
3,118
3,806
4,840
5,978
7,370
Short-term loans
2,020
2,263
2,049
1,749
1,949
Long-term loans
1,921
1,438
1,266
1,366
1,266
Total loans
3,940
3,701
3,315
3,115
3,215
Deferred tax liability
340
431
403
534
693
Liabilities
7,399
7,938
8,558
9,627
11,278
Gross block
6,012
6,532
7,265
8,315
8,940
Depreciation
1,220
1,525
1,996
2,523
3,088
Net block
4,792
5,008
5,269
5,792
5,852
172
266
200
625
2,234
1
138
329
329
329
Inventories
1,674
1,960
1,903
2,098
2,355
Debtors
2,163
2,199
2,572
2,924
3,293
Cash
152
72
72
134
88
Other current assets
856
958
1,120
1,323
1,490
Total current assets
4,844
5,190
5,667
6,480
7,226
Creditors
1,812
2,006
2,249
2,770
3,155
Other current liabilities
599
658
658
828
1,207
Total current liabilities
2,411
2,663
2,907
3,598
4,362
Net current assets
2,433
2,527
2,760
2,882
2,863
Total assets
7,399
7,938
8,558
9,627
11,278
Capital work-in-progress
Long-term Investments
Source: Company, Nirmal Bang Institutional Equities Research
Y/E March
Per share (Rs)
EPS
Book value
Valuation (x)
P/E
P/sales
P/BV
EV/EBITDA
EV/sales
Return ratios (%)
RoIC
RoCE
Pre –Tax RoCE
RoE
Margins (%)
EBITDA margin
PBIT margin
PBT margin
PAT margin
Turnover ratios
Asset turnover ratio (x)
Avg. inventory period (days)
Avg. collection period (days)
Avg. payment period (days)
Solvency ratios (x)
Debt-equity
Debt/EBITDA
Interest coverage
Growth (%)
Sales
EBITDA
PAT
FY16E
1,906
(59)
1,847
37
527
131
(303)
(418)
(84)
1,737
(1,475)
263
(300)
100
(200)
(200)
72
134
63
FY17E
2,237
(28)
2,209
40
565
158
(296)
(504)
(84)
2,088
(2,234)
(146)
200
(100)
100
100
134
88
(46)
FY13
FY14
FY15
FY16E
FY17E
34.4
129
32.0
158
44.5
201
50.7
248
61.2
305
25.9
1.6
6.9
14.3
1.9
27.8
1.5
5.6
14.4
1.8
20.0
1.4
4.4
11.9
1.6
17.6
1.2
3.6
9.9
1.4
14.5
1.1
2.9
8.7
1.2
15.1
16.0
21.2
26.6
13.7
14.5
19.4
22.3
18.0
17.8
20.3
23.7
16.4
16.8
22.5
22.6
16.7
17.2
23.1
22.1
13.5
11.0
8.4
6.3
12.5
9.9
7.5
5.6
13.1
10.1
8.9
6.9
13.9
10.9
9.4
7.0
14.2
11.3
10.0
7.5
1.8
53
59
57
1.8
58
57
59
1.8
50
60
61
1.8
50
60
66
1.8
50
60
67
1.3
2.2
3.7
1.0
2.1
3.7
0.7
1.6
4.4
0.5
1.3
6.3
0.4
1.1
7.6
NA
NA
NA
5.8
(2.0)
(6.8)
12.5
18.2
38.9
12.1
18.8
13.9
12.6
15.2
20.7
Source: Company, Nirmal Bang Institutional Equities Research
7
Greenply Industries
Institutional Equities
Rating track
Date
25 July 2013
7 October 2013
25 October 2013
7 January 2014
31 January 2014
11 April 2014
30 May 2014
30 June 2014
4 July 2014
21 July 2014
5 November 2014
24 November 2014
6 February 2015
13 April 2015
26 May 2015
15 June 2015
8
Rating
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Market price (Rs)
493
367
409
348
327
400
521
666
766
810
1,042
1,112
967
1,030
1,100
890
Target price (Rs)
645
645
607
607
536
536
704
1,075
1,075
1,075
1,248
1,424
1,407
1,407
1,407
1,407
Greenply Industries
Institutional Equities
Disclaimer
Stock Ratings Absolute Returns
BUY > 15%
ACCUMULATE -5% to15%
SELL < -5%
This report is published by Nirmal Bang’s Institutional Equities Research desk. Nirmal Bang has other business units with independent research teams separated by
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recipient and is not for public distribution. This should not be reproduced or redistributed to any other person or in any form. This report is for the general information
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subject to change from time to time without notice.
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2014.
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Team Details:
Name
Email Id
Direct Line
Rahul Arora
CEO
[email protected]
-
Girish Pai
Head of Research
[email protected]
Ravi Jagtiani
Dealing Desk
[email protected]
Pradeep Kasat
Dealing Desk
[email protected]
+91 22 3926 8100/8101, +91 22 6636 8831
Michael Pillai
Dealing Desk
[email protected]
+91 22 3926 8102/8103, +91 22 6636 8830
Umesh Bharadia
Dealing Desk
[email protected]
+91 22 3926 8017 / 18
Dealing
+91 22 3926 8230, +91 22 6636 8833
+91-22-39268226
Nirmal Bang Equities Pvt. Ltd.
Correspondence Address
B-2, 301/302, Marathon Innova,
Nr. Peninsula Corporate Park,
Lower Parel (W), Mumbai-400013.
Board No. : 91 22 3926 8000/1; Fax. : 022 3926 8010
9
Greenply Industries