Broker’s call: Century Plyboards (Buy)
In Q2-FY27 EBITDA increased by 31.6% y-o-y to ₹229.70 crore with increase in EBITDA margin by 30 bps y-o-y to 12.9%, supported by price hikes, operating leverage and cost optimisation
Century Plyboards (India) Ltd (CPIL), led by Sajjan Bhajanka, Sanjay Agarwal, and Late HP Agarwal, is India's premier plywood manufacturer holding 29% of the organized market share. Even amid industry difficulties, CPIL's top line rose 28.5% year-over-year to ₹1,780 crore in Q2FY27. The EBITDA grew by 31.6% year-over-year to ₹229.70 crore, with a 30 basis points increase in EBITDA margin to 12.9% in the same period, driven by price hikes, operating leverage, and cost optimization.
CPIL's plywood business has flourished, gaining market share despite macroeconomic and industry challenges; the company's capacity has expanded by 130,000 cubic meters, which could further boost earnings in the near term. Decreased capex and debt repayment in FY28 should further boost profitability in FY28. Given the rising demand for wood panels and the expectation for continued growth, we anticipate CPIL to emerge as a stronger player with enhanced brand credibility, market share gains across segments, and increased capacity utilization following the ramp-up of recently commissioned plants.
We have currently valued the stock using a P/E ratio of 35x, based on FY28 earnings per share of Rs 23.6, and we recommend buying the stock with a target price of ₹826. We have adjusted the P/E multiple downward from 40x to 35x due to mounting competition in the MDF business (which accounts for 21% of sales) and a delay in attaining the projected margins and return ratios.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
