Rs 38 to Rs 348: This stock turned into a multibagger in three years but trading in overbought zone

Shares of multibagger Greenpanel Industries Ltd have delivered over 800% percent returns to investors in the last three years. The stock, which closed at Rs 44.75 on September 11, 2020 rose to Rs 390.80 in the previous session (September 11, 2023), clocking 773.29% returns during the period. In comparison, Sensex has risen 72.77% in three years. In the previous session, Greenpanel Industries stock closed 1.98% higher to Rs 390.80 on BSE. Earlier, the stock opened flat at Rs 382 against the previous close of Rs 383.20 on BSE.

The share belonging to the woodpanel industry has gained 14.15% this year but fallen 10.41% in a year.

Total 0.24 lakh shares of the firm changed hands amounting to a turnover of Rs 94.14 lakh in the previous session. Market cap of the firm rose to Rs 4,792.28 crore. The stock hit a 52-week low of Rs 255 on March 29, 2023 and a 52-week high of Rs 448.90 on September 15, 2022.

In terms of technicals, the relative strength index (RSI) of the stock stands at 73.1, signaling it's trading in the overbought zone. Greenpanel Industries shares have a beta of 0.8, indicating very low volatility in a year. Greenpanel Industries shares are trading higher than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages.

Brokerage Systematix in a report said, "MDF remains the fastest growth category in India’s Rs 40,000 crore wood panel industry. Mushrooming acceptance and demand for MDF, domestic readymade furniture production post COVID, and large export opportunities have driven established (GREENP, Action Tesa, Rushil Décor) and new players (Century Ply, Greenply) to set up large MDF capacities in India."

"We like Greenpanel on its market leadership in MDF and robust financials (11%/9%/8% CAGR in revenue/EBITDA/PAT over FY23-25E, 18% RoE and healthy FCFs, despite continued capex). Our target price of Rs 439 is based on 21x/18x FY24E/FY25E P/E," added the brokerage.

Brokerage Prabhudas Lilladher has assigned a target price stock of Rs 459 for the stock.

“We are maintaining our positive view considering 12.7% MDF volume growth and 22.1% EBITDA margin in MDF segment (MDF contributes 86% revenue) in FY24. We estimate FY23-25E Revenue/EBITDA/PAT CAGR of 8.9%/2.8%/0.7%, with MDF volume CAGR of 17.4% and EBITDA per CBM of around Rs 6,060 in FY25. The company is well-positioned for growth and value creation given its 1) leading position in domestic MDF segment 2) strong growth prospects in domestic MDF demand 3) planned capacity increase of 35% over FY23-25 and 4) extensive distribution network. We have tweaked our FY24/FY25 earnings to adjust one-off expenses in Q1FY24 and adoption of new tax regime by GREENP. We value the stock at 21x FY25 EPS and arrive at TP of Rs459 (Rs 455 earlier). Maintain ‘BUY’ rating,” said the brokerage.

Seven promoters held 53.10 per cent stake in the firm and 1,21,289 public shareholders owned 46.90 per cent or 5.75 crore shares for the quarter ended June 2023. Of these, 1.17 lakh resident individuals held 1.96 crore shares or 16.01% stake with capital up to Rs 2 lakh. Only four shareholders with 1.62% stake or 19.91 lakh shares held capital above Rs 2 lakh for the quarter ended March 2023.

In the June quarter of this fiscal, Greenpanel Industries posted net profit of Rs 37.3 crore against Rs 77.6 crore profit during the quarter ended June 2022. Sales fell to Rs 392.6 crore in Q1 against Rs 471.3 crore during the quarter ended June 2022.

Profit before tax fell to Rs 50 crore in the June 2023 quarter against Rs 117.9 crore in the June 2022 quarter.

EBITDA margin in the June quarter fell to 17.04% as against 28.35% YoY. EBIDTA during Q1 came at Rs 65.8 crore against Rs 131.5 crore against the same quarter in the previous year.

About the Company

Greenpanel Industries, previously known as Green Panelmax, is the largest manufacturer of MDF in India and Asia. Its manufacturing plants have a combined annual capacity of more than 6,66,000 cubic meters of MDF complemented by distribution network of 3,000-plus outlets spread across the country. The company has state-of-the-art manufacturing plants in Uttarakhand and Andhra Pradesh.

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