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CMP 869.15
Target Price 947.00
ISIN: INE461C01020
JULY 22nd
2014
GREENPLY INDUSTRIES LTD Result Update (PARENT BASIS): Q1 FY15
BUYBUYBUYBUY
Index Details
Stock Data
Sector Forest Products
BSE Code 526797
Face Value 5.00
52wk. High / Low (Rs.) 917.70/300.15
Volume (2wk. Avg.) 1590
Market Cap (Rs. in mn.) 20977.80
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY14A FY15E FY16E
Net Sales 21595.18 23657.52 25786.70
EBITDA 2652.37 2978.79 3295.69
Net Profit 1144.66 1335.62 1485.01
EPS 47.43 55.34 61.53
P/E 18.33 15.71 14.13
Shareholding Pattern (%)
1 Year Comparative Graph
GREENPLY INDUSTRIES LTD S&P BSE SENSEX
SYNOPSIS
Greenply Industries Ltd is a leader in the
manufacturing and marketing of a wide range of
interior infrastructure products.
Revenue for the quarter rose by 7.55% to Rs.
5170.85 mn from Rs. 4807.92 mn, when compared
with the prior year period.
The company’s net profit Jumps to Rs. 302.29 mn
against Rs. 225.67 mn in the corresponding quarter
ending of previous year, an increase of 33.95%.
Profit before interest, depreciation and tax is Rs.
688.72 mn an increase of 17.85% YOY as against Rs.
584.39 mn in the corresponding period of the
previous year.
Earning per Share for Q1 FY15 was Rs 12.52 as
compared to Rs 9.35 in Q1 FY14.
Greenlam Exports business has grown at a CAGR of
24% over last 5 years. 47% business contribution of
laminates comes from international market.
Production of Commercial Veneers expected from
August 2014. Additionally venturing into Lumber
business (Teak Sawn Timber in FY 2015) and
Plywood (FY 2016).
Greenply Industries Ltd has started commercial
production of 'laminated wooden flooring' at the
Company's existing MDF Unit at Pantnagar,
Uttarakhand.
Net Sales and PAT of the company are expected to
grow at a CAGR of 9% each over 2013 to 2016E
respectively.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Greenply Industries Ltd 869.15 20977.80 47.43 18.33 3.60 60.00
Century Ply boards (I) Ltd 93.05 20706.10 3.01 30.91 8.29 100.00
Rushil Décor Ltd 46.00 662.40 2.09 22.01 0.88 0.00
Oriental Veneer Products Ltd 76.55 412.60 1.03 74.32 2.82 0.00
QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q1 FY15,
Greenply Industries Ltd is leader in the
manufacturing and marketing of a wide range of
interior infrastructure products in India, reported
its financial results for the quarter ended 30th JUNE,
2014.
Rs. In million JUNE-14 JUNE-13 % Change
Net Sales 5170.85 4807.92 7.55
PAT 302.29 225.67 33.95
EPS 12.52 9.35 33.95
EBITDA 688.72 584.39 17.85
The company’s net profit Jumps to Rs. 302.29 million in 1st quarter of FY 2014-15 as against Rs. 225.67 million in
the corresponding quarter ending of previous year, an increase of 33.95%. Revenue for the quarter rose by
7.55% to Rs. 5170.85 million from Rs. 4807.92 million, when compared with the prior year period. Reported
earnings per share of the company stood at Rs. 12.52 a share during the quarter, registering 33.95% increase
over previous year period. Profit before interest, depreciation and tax is Rs. 688.72 millions as against Rs. 584.39
millions in the corresponding period of the previous year.
Break up of Expenditure
Break up of Expenditure
Value in Rs. Million
Q1 FY15 Q1 FY14
Cost of material Consumed 2863.48 2835.79
Depreciation and Amortization Expense
181.58 137.68
Employees Benefit Expenses 523.86 476.85
Purchases of Stock in Trade 321.74 325.47
Other Expenditure 929.37 888.51
Segment Revenue
Latest Updates
• Greenlam Exports business has grown at a CAGR of 24% over last 5 years. 47% business contribution of
laminates comes from international market, making the largest exporter of decorative laminates from India
for last four consecutive years.
• Exports grew by 23.57% in laminates business of Rs 315.87 crores and contributed 14.64% of the net
revenue for the year 2014. Exports contribute 48% and 47% respectively in volume & value terms to the
laminates business. The company Commenced production of Laminated Flooring during Q1 FY 2015.
• The company Launched new products to expand it’s presence in the economy plywood segment valued at
more than Rs 120000.00 mn.
• Green Panelmax Plain, Pre-Laminated and Veneered Medium Density Fibreboards (MDF) Boards are
approved for use in defence works by the Military Engineering Services
• Greenply Industries Ltd has started commercial production of 'laminated wooden flooring' at the Company's
existing MDF Unit at Pantnagar, Uttarakhand.
• Laminates Segment has increased its production to 10.76 mn sheets in FY 2014 from 10.37 mn sheets in FY
2013; achieved capacity utilisation of 104%.
• Greenply Industries (Myanmar) Pvt. Ltd. which was incorporated as a wholly-owned subsidiary of Greenply
Industries Limited for setting-up of a Veneer or Veneer-cum-Plywood Unit in Myanmar. Greenply Industries
(Myanmar) Pvt. Ltd has obtained approval of the Myanmar investment commission to set up the unit and has
completed commissioning of Veneering Line and started trial Production.
• Production of Commercial Veneers expected from August 2014. Additionally venturing into Lumber business
(Teak Sawn Timber in FY 2015) and Plywood (FY 2016). Expected to achieve Topline of USD 30 million on
optimum capacity utilization.
COMPANY PROFILE
Greenply Industries Limited (GIL) is India's largest interior infrastructure company with consolidated net sales
of Rs. 2215 crores in FY14. The company is engaged in the manufacture of decorative laminate, plywood,
decorative veneers and MDF (medium density fiberboard). The company expertise in supplying high-quality
products, provide both surface finish foundation/structural products for homes, offices and retail
establishments. Greenply markets the most comprehensive portfolio of residential and commercial floor
products available - plywood & block boards, decorative laminates, decorative veneers, and MDF under the
brand names of Greenply Plywood, Green Club Premium Ply, Greenlam Laminates, Green Decowood and Ecotec.
The company has seven state of the art manufacturing facilities across the country manufacturing products of
global standards. The company has more than 40 branches across the country and a strong channel network of
over 15000 dealers, distributors, sub-dealers and retailers.
The consistency-testifying certifications of the Company comprise ISO 9001 (quality management), ISO 14001
(environment system), ISO 18001 (health and safety) and SA 8000 (socially accountable practices).
Global Presence
Greenply brands are available in more than 100 countries (including Taiwan, Malaysia, China, Indonesia and
Russia). Besides, it acquired GIL Intercontinental Pte. Ltd., incorporated in Singapore, as a wholly owned
subsidiary company to cater to the growing ASEAN interior infrastructure market.
Products
� Plywood & block boards
� Decorative laminates
� Decorative veneers
� MDF
� Greenlam Sturdo
Subsidiary companies
� Greenlam Asia Pacific Pte. Ltd.
� Greenlam America, Inc.
� Greenlam Europe (UK) Ltd
� Greenply Trading Pte Ltd.
Greenlam Asia Pacific Pte Ltd explores new markets for laminates in South-east Asian countries. And Greenlam
America, Inc is engaged in the marketing and distribution of high-pressure laminates in North and South
America. Greenlam Europe (UK) Ltd will explore and market for the products of the Company in UK. Greenply
Trading Pte Ltd. will market the products in Singapore and its neighboring countries.
FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March 31, 2013 -2016E
GREENPLY INDUSTRIES LTD. FY13A FY14A FY15E FY16E
SOURCES OF FUNDS
Shareholder's Funds
Share Capital 120.68 120.68 120.68 120.68
Reserves and Surplus 4650.62 5710.58 6963.25 8216.63
1. Sub Total - Net worth 4771.30 5831.26 7083.93 8337.31
Non Current Liabilities
Long term borrowing 2353.44 2610.49 2881.98 3141.36
Deferred Tax Liabilities 403.35 486.09 559.00 637.26
Other Long term liabilities 84.13 81.42 79.79 82.19
Long Term Provisions 166.71 198.08 227.79 259.68
2. Sub Total - Non Current Liabilities 3007.63 3376.08 3748.57 4120.49
Current Liabilities
Short Term Borrowings 2976.57 2884.57 2754.76 2589.48
Trade Payables 2933.22 3312.60 3720.05 4092.05
Other Current Liabilities 1466.96 1714.44 1957.89 2173.26
Short Term Provisions 102.84 108.59 114.45 119.03
3. Sub Total - Current Liabilities 7479.59 8020.20 8547.16 8973.82
Total Liabilities (1+2+3) 15258.52 17227.54 19379.65 21431.63
APPLICATION OF FUNDS
Non-Current Assets
Fixed Assets
i. Tangible assets 6434.57 6785.70 7328.56 8061.41
ii. Intangible assets 83.31 67.27 79.38 88.90
iii. Capital Work in Progress 233.71 949.86 1530.12 1940.71
a)Total Fixed Assets 6751.59 7802.83 8938.05 10091.03
b) Non-current investments 175.25 312.89 475.59 618.27
c) Long Term loans and advances 433.85 577.27 738.91 901.46
d) Other non-current assets 0.06 0.00 0.00 0.00
1. Sub Total - Non Current Assets 7360.75 8692.99 10118.21 11709.48
Current Assets
Inventories 3279.14 3828.77 4354.77 4845.16
Trade receivables 3432.07 3502.79 3572.85 3608.57
Cash and Bank Balances 162.78 107.99 116.63 124.79
Short-terms loans & advances 1021.22 1092.01 1179.37 1238.34
Other current assets 2.56 2.99 3.48 4.00
2. Sub Total - Current Assets 7897.77 8534.55 9227.10 9820.87
Total Assets (1+2) 15258.52 17227.54 19379.65 21431.63
Annual Profit & Loss Statement for the period of 2013 to 2016E
Value(Rs.in.mn) FY13A FY14A FY15E FY16E
Description 12m 12m 12m 12m
Net Sales 20008.15 21595.18 23657.52 25786.70
Other Income 64.99 67.56 68.91 72.36
Total Income 20073.14 21662.74 23726.43 25859.05
Expenditure -17432.19 -19010.37 -20747.64 -22563.36
Operating Profit 2640.95 2652.37 2978.79 3295.69
Interest -607.22 -582.95 -632.50 -676.78
Gross profit 2033.73 2069.42 2346.29 2618.92
Depreciation -519.87 -575.69 -685.07 -767.28
Profit Before Tax 1513.86 1493.73 1661.21 1851.64
Tax -372.24 -349.07 -325.60 -366.62
Net Profit 1141.62 1144.66 1335.62 1485.01
Equity capital 120.68 120.68 120.68 120.68
Reserves 4648.00 5707.58 6963.25 8216.63
Face value 5.00 5.00 5.00 5.00
EPS 47.30 47.43 55.34 61.53
Quarterly Profit & Loss Statement for the period of 31st DEC, 2013 to 30th SEP, 2014E
Value(Rs.in.mn) 31-Dec-13 31-Mar-14 30-Jun-14 30-Sep-14E
Description 3m 3m 3m 3m
Net sales 5245.13 5706.86 5170.85 6024.04
Other income 12.26 18.36 3.48 2.87
Total Income 5257.39 5725.22 5174.33 6026.91
Expenditure -4575.76 -4983.10 -4485.61 -5277.06
Operating profit 681.63 742.12 688.72 749.86
Interest -144.21 -154.16 -150.68 -152.19
Gross profit 537.42 587.96 538.04 597.67
Depreciation -149.31 -147.44 -181.58 -185.94
Profit Before Tax 388.11 440.52 356.46 411.73
Tax -102.67 -72.21 -54.17 -66.29
Net Profit 285.44 368.31 302.29 345.44
Equity capital 120.68 120.68 120.68 120.68
Face value 5.00 5.00 5.00 5.00
EPS 11.83 15.26 12.52 14.31
Ratio Analysis
Particulars FY13A FY14A FY15E FY16E
EPS (Rs.) 47.30 47.43 55.34 61.53
EBITDA Margin (%) 13.20 12.28 12.59 12.78
PBT Margin (%) 7.57 6.92 7.02 7.18
PAT Margin (%) 5.71 5.30 5.65 5.76
P/E Ratio (x) 18.38 18.33 15.71 14.13
ROE (%) 23.94 19.64 18.85 17.81
ROCE (%) 29.33 28.93 28.80 28.88
Debt Equity Ratio 1.26 0.91 0.80 0.69
EV/EBITDA (x) 10.16 9.88 8.90 8.07
Book Value (Rs.) 197.58 241.48 293.50 345.43
P/BV 4.40 3.60 2.96 2.52
Charts
OUTLOOK AND CONCLUSION
� At the current market price of Rs.869.15, the stock P/E ratio is at 15.71 x FY15E and 14.13 x FY16E
respectively.
� Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.55.34 and
Rs.61.53 respectively.
� Net Sales and PAT of the company are expected to grow at a CAGR of 9% over 2013 to 2016E respectively.
� On the basis of EV/EBITDA, the stock trades at 8.90 x for FY15E and 8.07 x for FY16E.
� Price to Book Value of the stock is expected to be at 2.96 x and 8.07 x respectively for FY15E and FY16E.
� We recommend ‘BUY’ in this particular scrip with a target price of Rs.947.00 for Medium to Long term
investment.
INDUSTRY OVERVIEW
India is one of the largest markets globally for different types of furniture. It is estimated that the furniture
market in India is likely to witness a CAGR of about 30 per cent over the next three years. In fact, an independent
industry research institute and consulting firm, CSIL Milano has classified India as one of the 14 largest furniture
markets in the world due to the rising purchasing power of the more than 400 million strong middle-class
segment.
Furniture industry statistics
India’s organised furniture industry is estimated at around US$8 billion and expected to grow at a CAGR of about
25-30% annually. The modular furniture market in India was estimated to be about US$ 160 million (Source:
Index Media Consulting report). The size of the international range of premium furniture was estimated at about
US$20 million and largely serviced by foreign players and imports. India’s furniture market was concentrated in
Tier-I, Tier-II and Tier-III cities; the leading 784 urban centres contributed 41% to the total consumer furniture
market; Tier-I and Tier-II type cities accounted for 33% of the total market.
Furniture consumption in India recorded 10% average annual growth over the last decade, reaching about US$
15 billion in 2013 at retail prices. India’s organised furniture sector is marked by about 5,000 companies and
nearly 10,500 importers. India imports around US$150 million worth of furniture, catering primarily to urban
affluent households. India’s interior decor industry is heading towards high-end, low maintenance, quickly
installable and customisable products.
Branded furniture accounts for a 30% market share in India. IKEA announced intentions of investing
Rs.105000.00 mn (1.2 billion euro) following the recent policy change, which permitted 100% foreign direct
investment (FDI) in single-brand retail, which can potentially widen the sector
Opportunities and threats
Growth drivers of the industry
• Rising proportion of working age population:
India’s median age of 24 makes it a young country with a large productive workforce. Nearly two-third of
India’s population is in the working age group from 15-64 years marked by financial independence,
aspirations and access to growing disposable incomes.
• Rising incomes:
India’s per capita income was projected to increase 10.4% to Rs. 74920 in 2013-14 as the country becomes a
$1.7 trillion economy, driving consumption.
• Rising urbanisation:
India has the highest urban population rate of change among BRIC nations. The country’s urban population
accounted for 31.6% of its total population in 2012. In 2010-15, the country’s urban population is expected
to grow 2.5% above the 1.3% growth in the total population. At this rate, it is estimated that around 843
million people will live in Indian cities by 2050, offering growing opportunities for its real estate and
furniture sector.
Office furniture segment
The Indian office furniture segment is estimated at around US$ 1.6 billion, with 40% of that is generated through
the provision for desks. Other products which are mainly consumed are seating, executive furniture, cabinets and
office storage, filing systems, wall-to-wall units, furniture for communication areas.
The modular furniture market in India, estimated to be about Rs. 800 crore, is dominated by bigger players. The
market size of the international range of premium furniture is estimated to be worth about Rs. 100 crore, and is
primarily catered to by foreign players. It is expected to grow at the rate of 10-15% over the next three or four
years driven by demand from modern work spaces which includes the IT-ITeS, retail, healthcare and
infrastructure segments.
Interior infrastructure
The Indian interior infrastructure sector is growing at a CAGR of 5-7%. The plywood and laminates is a highly
fragmented industry. The share of the unorganized sector is about 78% in plywood and about 45% in laminates.
The growth registered by organised sector is 15-20%, in comparison to overall industry growth of 5%, indicates
a shift of customer preferences from unbranded to branded goods.
India’s wood panel market grew at a CAGR of 6-8% over FY08-FY12 in volume terms. There has been clear shift
of preference for branded products in the market that has led to a decline in market share for unorganized
players. Organised players have grown at 15-20% in volume terms over FY08-FY12. The organised sector
comprised 39% (MDF and particle board-100% organised; Plywood - 22% organised) with the unorganized
accounting for the rest.
India’s plywood industry comprised approximately 78% of total wood panel market and was valued at Rs.125 bn
in FY12. The industry is expected to grow at the rate of 6-8% with organised players continuing to grow at a
double-digit rate.
As far as the Indian MDF industry is concerned, it accounts for the balance 22% of the total wood panel market
and which is completely controlled by the organised players; a shift of 8-10% is expected from plywood to MDF
over the next three or four years. The investment for setting up a MDF plant is significant, which is a major entry
barrier for players from the unorganized sector. Currently, 30-35% of the MDF demand is met through imports.
India’s laminates market was valued at Rs. 40 bn in FY12. Organised players controlled around 55% of market
with the rest controlled by unorganized players. It is expected to grow in line with growth of wood panel market.
Organised players have increased their presence on account of rising aspirations and brand consciousness.
Outlook
India’s rapidly expanding economy is seeing growing affluence, both in urban and rural areas. The tremendous
penetration of the mass media has also resulted in millions of middle-class Indians aspiring for more lavish
lifestyles. Furniture-makers are catering to the unmet urban middle-class need for stylish homes in compact
apartments.
With the Indian economy and the real estate sector continuing to grow at a phenomenal pace, demand for office
and home furniture is expected to expand even further. The entry of a number of international players and the
rapid emergence of domestic brands is transforming the industry, offering the discerning Indian consumer a
wide range of home and office furniture to choose from. The furniture industry market size is expected to touch
Rs. 1120000.00mn crore by 2015.
Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale
of any financial instrument or as an official confirmation of any transaction. The information contained herein is
from publicly available data or other sources believed to be reliable but do not represent that it is accurate or
complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. This document is provide for assistance only and is not intended to be and must
not alone be taken as the basis for an investment decision.
Firstcall India Equity Research: Email – [email protected]
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