Broker’s Call: Century Plyboards (Buy)
HDFC Securities
Century Plyboards reported a strong Q1, with demand remaining healthy through July and channel inventories exiting at normal levels. Management highlighted the addition of Aamir Khan to their advertising campaign, which will boost brand visibility but may pressure margins due to elevated ad spend. Plywood margins are expected to weaken from the high levels seen in Q1FY27 due to increased marketing expenses.
The company is expanding capacity for fully in-house manufacturing, with current outsourcing reduced to a single-digit percentage of the overall mix. Century Plyboards boasts a strong franchise, aggressive marketing, and a wide range of SKUs, demonstrating consistent execution and gaining market share. With new capacity coming online, the company is expected to outperform peers and consolidate its market-leading position.
Considering the anticipated rise in advertisement spending, the FY27E APAT is trimmed by 4%, while FY28/29E estimates are maintained. The stock is valued at 40x September 2028E EPS, with a target price of ₹990/share.
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