Greenpanel Industries - Strong Franchise; Near-Term Headwinds: HDFC Securities

HDFC Securities Institutional Equities

We recently interacted with Greenpanel Industries Ltd. management. Domestic MDF demand is muted and rising imports are impacting volume for domestic players.

However, domestic pricing remains stable as imports are mostly industrial grade (targeting original equipment manufacturers), while the retail market is focused on value-added products.

The industry is also facing raw material inflation on plantation wood shortage (partly mitigated currently by a cool-off in resin prices).

Greenpanel is confident of demand recovery, going ahead. In the interim, it is focusing on expanding its retail distribution and VAP share to cushion margins.

We expect the margin to bottom out in FY24E and, hence, maintain our 'Buy' rating on Greenpanel, with a revised target price of Rs 450/share (20 times September-25E earnings per share).

We continue to like Greenpanel because it leads the Indian MDF market with a strong trade presence and robust balance sheet.

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