Small Cap Building material Sector Stock Hits New 52-Week Low, IDBI Capital Says "Buy" For 24% Gains

Renowned brokerage firm IDBI Capital has assigned a "Buy" on Greenply Industries Ltd. with an attractive target price of Rs 171 apiece. If you buy the stock today at the current market price, it would likely fetch you a gain of up to 24% from its current level considering the given target price. It is a small-cap stock from the Building material sector operating in the Laminates/Plywood/Boards industry. It has a market capitalisation of Rs 1,704.24 crore.

According to the brokerage, The Indian furniture market is expected to grow by 6% CAGR from $23 bn in FY21 to $33 bn in FY27 on the back of rising demand of residential real estate in India.

Greenply Industries' Stock Performance Over The Past 5 Years

The stock is currently trading at Rs 138.70 apiece, up 1.31% from its previous close of Rs 136.90 apiece. Its 52-week low is Rs 134.50 apiece, which it recorded yesterday, on 6 February 2023. Meanwhile, its 52 week high is Rs 232.50 apiece, recorded on 6 April 2022.

The stock has given 1.95% positive return in 1 week, and 1.84% in 1 month, respectively. It has fallen 13.85% in 3 months and 18.15% in 1 year, respectively. It gained 17.89% in 3 years. However, it has fallen 58.79% in the past 5 years.

Dominant player in an industry with tailwinds

IDBI Capital said, "We initiate coverage on Greenply Industries with a BUY rating and a target price of Rs171. Greenply is a proxy play on rising real estate sales in India as it is second largest plywood company in India and is on the verge of commissioning a 240,000 cbm Medium-density fibreboard (MDF) plant in Vadodara, Gujarat."

It added, "We expect the plant to gradually ramp up production during FY24. Post this expansion, we forecast Greenply's sales/EBITDA/net profit to grow at a CAGR of 18%/45%/35%, respectively, over FY23-25E. With this plant, the company will complete its major capex cycle. Hence, we expect its free cashflows to remain strong over FY24-25E and net debt is likely to fall sharply during the same period. Lastly, valuation at (PER of 10x FY25) is inexpensive in our view (Century Plyboards trades at 20x)."

Disclaimer

The stock has been picked from the brokerage report of IDBI Capital. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.