Nuvama Institutional Equities has a target price of Rs 464 on Greenply Industries. This implies a bullish 50% upside on the stock, while maintaining its ‘Buy’ recommendation. The Nuvama analysts met the Greenply Industries Joint MD & CEO Manoj Tulsian who highlighted that balance sheet deleveraging remains the key focus area.
Nuvama on Greenply Industries: Focus on cutting debt
Currently, Grennply Industries’ debt stands at Rs 550 crore, which is considered peak debt by the company and the management. Debt levels should reduce in the coming years, given healthy cash flows.
Secondly, the management thinks that MDF oversupply will normalise over the coming quarters. MDF stands for Medium Density Fibreboard. It is an engineered wood product made by breaking down hardwood or softwood into wood fibres and then combining them with resin/wax, and pressing them into panels under high temperature and pressure.
Nuvama on Greenply Industries: Revise plywood growth guidance
Furthermore, Greenply Industries is likely to revise its plywood growth guidance post-Q2FY25 while maintaining double-digit growth for MDF in FY26. Globally, demand for MDF machinery is not encouraging. Hence, manufacturers may be able to deliver equipment slightly earlier than previously expected. Plus, MDF is a very organised and structured business as compared with plywood, which is more labour-oriented and unorganised.
Nuvama on Greenply Industries: Might clock better margins than guidance
The company’s margin target for plywood is 10% for FY26 and 16% for MDF. The company aspires to clock better margins than the guidance of 16%, compared to industry margins of 15%. Timber prices are currently stable, but the management expects a correction in H2FY26, which could also support margins.
“BIS implementation, a strong scale-up in MDF, discontinuance of lossmaking Gabon operations and opportunities with Samet Hardware are key positives for Greenply,” said Nuvama.
Greenply Industries stock performance
The share price of Greenply Industries has declined 8% in the past one month. However, Greenply Industries’ stock price over the last 6 months they have risen 12.5%. The stock has corrected over 20% in the past one year.