Greenpanel - Leader In The Fast Growing MDF Segment: IDBI Capital Initiates Coverage With A 'Buy'

IDBI Capital Report

We initiate coverage on Greenpanel Industries Ltd. with a 'Buy' rating and a target price of Rs 464. Greenpanel Industries is a proxy play on rising real estate sales in India as it is largest medium density fibre player (capacity 660,000 cubic metre) in India and is expected to add another 231,000 cbm capacity in FY25.

We expect the plant to gradually ramp up production during FY26. Post this expansion, we forecast Greenpanel Industries' sales/Ebitda/net profit to grow at a compound annual growth rate of 17%/35%/44%, respectively, over FY24E-26E.

Post this expansion; the company will complete its major capex cycle. Hence, we expect its free cashflows to remain strong beginning FY25E.

It is noteworthy that the company’s debt is likely to remain modest even after this expansion.

Lastly, valuation (price-to-earnings ratio of 16 times FY26E) is inexpensive in our view (peers trade at 20-30 times).

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