Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Greenply Industries: Robust performance… - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Nov 30, 2007

    Greenply Industries: Robust performance…

    Performance summary

    • Topline grew by 40% YoY owing to improved physical performance and high demand for the products.
    • Operating profit reported 131% YoY growth, mainly on account of robust topline growth and improved realisations.
    • Led by growth in operating profits and higher other income, net profits witnessed 135% YoY growth during 2QFY08.
    • Even if one excludes other income, net margins have expanded by 2.2% instead of 3.4% as interest and depreciation charges witnessed a jump on account of expansion plans.

    Financial performance snapshot
    (Rs m) 2QFY07 2QFY08 Change 1HFY07 1HFY08 Change
    Net sales 972 1,356 39.5% 1,818 2,516 38.4%
    Expenditure 878 1,140 29.8% 1,632 2,132 30.6%
    Operating profit (EBITDA) 94 216 130.9% 186 384 106.5%
    EBITDA margin (%) 9.6% 15.9%   10.2% 15.3%  
    Other income 4 23 470.5% 6 40 535.9%
    Interest 23 49 117.9% 49 92 85.8%
    Depreciation 19 33 77.6% 36 62 73.3%
    Profit before tax/(loss) 56 156.40 178.3% 107 270 152.7%
    Tax 9 45 414.9% 14 68 370.9%
    Net profit 48 112 135.3% 93 203 118.7%
    Net margin (%) 4.9% 8.2%   5.1% 8.1%  
    No of shares (m)         16.6  
    Diluted EPS (Rs)*         20.3  
    P/E (times)         15.6  
    *trailing twelve month earnings

    What is the company’s business?
    Greenply Industries is the largest integrated manufacturer of interior infrastructure products in India. The company was integrated as a saw mill unit in 1984 and over a period of time has emerged as a preferred manufacturer of all products related to interior infrastructure. The company has a pan India presences with 24 branches across the country with a strong dealer/distributors/sub dealers and retailers network of more than 7,000. The company’s plywood business accounts for nearly 52% of the total revenues with the rest being contributed by the laminates and veneer & decorative segment. The company exports laminated products to 18 countries such as, Thailand, Indonesia, Taiwan, Canada, Baharain, Hongkong, Malaysia, Singapore, Kenya, Dubai, Russia, Syria, USA, Australia, Mexico, Saudi Arabia, China and Israel. Exports contributed to around 22% of the total laminates turnover during FY07.

    What has driven performance in 2QFY08?
    Robust topline growth: The organised interior sector is growing at the rate of almost 25% to 30%, while the company has fared relatively better clocking almost 40% YoY growth during 2QFY08 owing to improved utilisation rates and improved realisations. Plywood & allied products that constitute almost 51% to 52% of the company’s total revenues reported 95% capacity utilisation. On account of higher utilisation, the production stood at 4.46 sq m mt achieving almost 42% YoY growth. The laminate division on expanded capacity of 5.34 m sheets operated at almost 96% utilisation rate. The production of this divison increased by 18% YoY as it produced almost 1.4 m sheets during the quarter. The robust growth is not only achieved on account of higher utilisation rate or expanded capacity but also due to improved product mix, which led to improved realisations. The average realisation for laminates and decowood improved by almost 12% YoY and 17% YoY respectively. Thus owing to the overall good show, the company has fared well above industry growth rate.

    Segmental information
    (Rs m) 2QFY07 2QFY08 Change 1HFY07 1HFY08 Change
    Plywood & Allied Products 65 160 147.2% 119 309 159.1%
    PBIT margin (%) 12.2% 19.0%   12.1% 19.9%  
    Laminates & Allied Products 62 140 126.1% 132 247 88.0%
    PBIT margin (%) 9.8% 18.2%   10.9% 17.2%  

    Favoured by rupee appreciation: The company is a net importer i.e. exports laminates and imports raw materials such as kraft and design paper, phenol etc which are major inputs for laminates. Thus, the rupee appreciation has benefited the company by arresting the increase in cost of operation. Further, as mentioned earlier, robust topline growth led by improved realisations and improved physical performance has led to an almost 131% YoY growth in operating profits. The improved product mix has enabled the company to supply value added products like particle board and decorative veneer, which fetch better margins. The company’s foray into particle board production not only resulted into improved profitability but also enabled the company to bring down costs, as by-products from plywood constitute 50% of its cost. Thus, all these factors have led to the 6.3% expansion in EBITDA margins during 2QFY08.

    Cost break up
    (% of sales) 2QFY07 2QFY08 1HFY07 1HFY08
    Increase/decrease in stock in trade -0.5% -1.5% -1.0% -2.6%
    Raw materials consumed 62.8% 58.6% 63.3% 59.0%
    Purchase of Finished goods 0.5% 1.5% 0.3% 1.4%
    Staff cost 7.1% 6.6% 7.1% 6.9%
    Administrative & selling expenses 14.5% 14.0% 14.8% 15.2%
    Other expenditure 5.9% 4.9% 5.2% 4.9%

    Flows to the bottomline: In line with the operating profit growth, net profits have registered 135% YoY growth during 2QFY08. An impressive show at the operating level and higher other income resulted into a 3.4% expansion in net margins. Even if one excludes other income, the net profit has doubled during the 2QFY08, despite a big jump in finance and depreciation charges, which was due to the company’s expansion programme.

    What to expect?
    Going forward, as the incremental demand for office space in India is expected to exceed 85 m sq ft by 2008, number of malls is expected to go up to 350 and demand for residential units is expected to be around 22.5 m by the end of the 11th plan, the sector is expected to continue to clock a growth rate of 15% p.a. The company on account of its initiatives, brand building and pan India presence expects to grow at around 35% in the next 3 to 4 years.

    At the current price of Rs 317, the stock is trading at a price to earnings multiple of 16 times its trailing twelve months earnings. Considering the opportunities, strong presence across India and slew of strides made by the company, we expect the company to grow in line with the industry. However, the key challenges would be on the raw material front, dominance of the unorganised sector and maintaining and improving margins going forward.



    Equitymaster requests your view! Post a comment on "Greenply Industries: Robust performance…". Click here!


    More Views on News

    Securities & Intelligence Services Ltd. (IPO)

    Jul 31, 2017

    Should you subscribe to the IPO of Securities & Intelligence Services Ltd?

    Why Super Investors are Underperforming in This Market (The 5 Minute Wrapup)

    Jul 8, 2017

    If Super Investors can wait for the right pitch, so can you.

    Tejas Networks Ltd. (IPO)

    Jun 14, 2017

    Should you subscribe to the IPO of Tejas Networks Ltd?

    Discover the Secrets of Hidden Smallcaps From These AGMs (The 5 Minute Wrapup)

    May 26, 2017

    Don't be surprised to come across some Super Investors there!

    A Trader's Nightmare. A Business Owner's Delight. (The 5 Minute Wrapup)

    May 19, 2017

    Not all small-cap investors see themselves as traders. Some see themselves as business owners.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working(Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Think Twice Before You Keep Money In A Savings Bank Account(Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 24, 2017 03:36 PM


    • Track your investment in GREENPLY IND with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks


    Compare Company With Charts