Broker's Call

Equirus Research

Century

Plyboards (Buy)

CMP: ₹253

Target: ₹333

Key takeaways: a) Century Plyboards posted revenue/EBITDA/PAT growth of 11 per cent/13 per cent/13 per cent for FY17 led by higher contribution from commercial veneer and laminate divisions, even as the plywood division posted flat growth due to demonetisation and subdued real estate activity during FY17.

b) Plywood sale volumes/ revenues have grown at a 7 per cent/10 per cent CAGR over FY13-17 while laminate sale volumes/revenues at a 16 per cent/18 per cent CAGR over the same period.

c) Average capacity utilisation for the plywood division in FY17 stood at 84 per cent vs 94 per cent in FY16 due to capacity expansion at the company’s Guwahati unit. Average capacity utilisation for the laminates division improved from 89 per cent in FY16 to 103 per cent in FY17.

d) GST implementation is expected to reduce the pricing differential between branded and unbranded plywood products by 10-20 per cent.

We expect CPBI to post revenue/EBITDA CAGR of 21 per cent/21 per cent over FY17-20E with revenue

ramp-up coming from the new MDF and laminate capacities.