Greenply Industries to benefit from these factors: Analysts are bullish on its stock Factors like rising population, increasing disposable incomes, improving living standards and rising usage of online shopping platforms are driving furniture demand
Greenply Industries, the organised player in the interior infrastructure domain reported a good performance in the December 2024 quarter, with revenue broadly meeting the Reuters-Refinitiv estimates and PAT surpassing estimates by 5%. Healthy growth in the plywood and MDF segments, aided by recent price hikes, boosted revenue, while lower interest expenses supported net income.Despite demand challenges in the December quarter, the management expects improvement in 2025-26, driven by a real estate revival and BIS implementation, benefitting organised players like Greenply.
Moreover, timber prices, which grew by 3% quarter-over-quarter in the December quarter, are expected to soften over the next two-three quarters and will support profit margins.
The company has a diversified product portfolio and a vast distribution network of over 3,000 dealers. In October 2023, it entered the furniture hardware segment through a joint venture with Turkey-based Samet. The management expects the revenue from the furniture JV to ramp up in the March 2025 quarter.
The company is reaping the benefits of India’s growing furniture and wood panel markets. Factors like rising population, increasing disposable incomes, improving living standards and rising usage of online shopping platforms are driving furniture demand. Meanwhile, new construction, renovation and growth in both residential and commercial segments are supporting the growth of the wood panels market.
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In the wood panel sub-segments, organised players like Greenply benefit from challenges faced by unorganised players in plywood, including sustainability regulations, raw material sourcing, labour issues, and higher working capital needs. Similarly, MDF favours organised players due to its high capital investment requirements for plant and machinery. The company has taken several strategic initiatives to sustain its growth momentum. Investments in upgrading manufacturing processes, customer-centric product innovation, focus on improving operational efficiency through investments in IT and digitalisation, strict quality control standards and targeted brand building through engagement with stakeholders are some of the steps undertaken by the management to strengthen its business.
The capex plans are on track, with Rs.134 crore investment planned for adding plywood capacity in Odisha. It is also adding a flooring line to the existing MDF line, which will help improve the product mix. Despite capex spending, the management expects net debt to peak by the March 2025 quarter.
The stock has significantly outperformed the market benchmark in the past year, with a 7.7% return, compared to the BSE Sensex with 0.3% return.
Selection methodology: We pick the stock that has shown the maximum increase in ‘consensus analyst rating’ during the past three months. The consensus rating is arrived at by averaging all analyst recommendations after attributing weights to each of them (1 for strong buy, 2 for buy, 3 for hold, 4 for sell, 5 for strong sell). An improvement in consensus analyst rating indicates that the analysts are getting bullish on the stock. Only stocks with more than five analysts covering them are considered. You can see similar consensus analyst rating changes during the past week in ETW 50 table.
This story originally appeared on: India Times - Author:Faqs of Insurances
