Shares of Century Plyboards India Ltd have been under pressure recently after hitting a new 52-week high 749 Continuing high inflation concerns on raw material in March influenced investor sentiment for the stock. Stocks on the National Stock Exchange have lost nearly 15% so far this calendar year.
However, a recent dealers channel check by ICICI Securities Ltd showed that the demand trends in segments such as plywood, laminates and MDF were stable on a sustained pick-up in the residential market in Q1FY23 and higher spending on home improvement post the pandemic. .
The domestic brokerage house noted that the company grew 2-4% in plywood segment and 3-4% in laminates during Q1FY23. This should help the company defuse some of the raw material price pressures and thus, help it maintain stable margins going forward. It should be noted that the company’s management had guided for 15-25% revenue growth across all sectors in FY13.
“We model a CAGR of 18% during FY 22-24E from growth in the MDF segment. We expect 30% in margin in FY 22-24E due to the increasing contribution of the high margin MDF segment due to commissioning of new capacities. improve the basis points. Securities Ltd. said in a report on June 28. CAGR is short for Compound Annual Growth Rate. One basis point is 0.01%.
The company’s ongoing MDF brownfield expansion in Punjab is expected to be commissioned by October 2022 and its greenfield expansion in Andhra Pradesh is likely to be commissioned in the second half of FY24. Its greenfield laminate capacity will start production in Q2FY24 in the first phase of expansion in Andhra Pradesh. Note that all declared capital expenditures are timely and management plans to fund them primarily from internal sources.
On the flipside is continuing slowdown in housing demand and higher input prices, which could adversely impact the company’s profitability, according to an ICICI Securities report.