Greenlam Industries Q4 Results Review- Premium Valuations Compel Rating Downgrade, Assign Sell: Yes Securities

Yes Securities Report

Greenlam Industries Ltd. registered healthy revenue growth of 17% YoY and 11%QoQ to Rs 6.24 billion. Laminates sales (86 of revenue), grew by 9% YoY and 7.4% QoQ (two-year CAGR stood at 12.5%), wherein volumes increased by 12% YoY and 12.5% QoQ (two-year CAGR stood at 14%). Average selling price came in at Rs 1,026 versus Rs 1,053/Rs 1,075 in Q4 FY23/Q3 FY24, respectively. Ebitda margins came in at 16.6% versus 15.6%/15.8% in Q4 FY23/Q3 FY24, respectively.

For laminates, domestic revenue (49.5% of laminates revenue) increased by 12%YoY and remained flattish QoQ while exports revenue (50.5% of laminates sales) grew by 7%YoY and 14.4% QoQ.

Domestic volumes (56.3% of laminates vols) reported a growth of 8.4% YoY and 4% QoQ (two-year CAGR stood at 17%); Exports volumes (43.7% of laminates vols), registered an increase of 16.6% YoY and 25% QoQ (two-year CAGR stood at 11%).

Laminates plant operated at 85% utilization on total capacity of 24.52 million sheets. Veneers and allied segment’s revenue grew by 45% YoY and 28% QoQ to Rs 610 million. Ebitda margins stood at 3.3% versus loss of Rs 16 million in Q4 FY23 and marginal profit of Rs 3 million in previous quarter.

Plywood segment (commenced operations in FY24) volumes stood at 1.04 msqm versus 0.73 msqm in Q3 FY24, average selling price improved sequentially from Rs 218/sqm to Rs 251/sqm. The segment’s operational loss stood at Rs 76 million versus loss of Rs 83 million in previous quarter. Utilization during Q4 FY24 stood at 23%.

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