Buy This Multibagger Stock For A Target Price of Rs.2,370 Says Anand Rathi

Greenlam Industries Ltd is a small-cap company with a market capitalization of Rs 4,520.14 crore. The company primarily concentrates on the construction materials industry and interacts with global décor trends in India and abroad. Greenlam is one of the top three laminate producers in the world and Asia, with the highest capacity in decorative veneer. Greenlam, the first company in India to construct Engineered wood flooring, released wooden floors under the Mikasa brand.

With a price spike of +186.10 in the last year, the company has provided multibagger returns of 102.37 percent. On the NSE, the stock rose from Rs 181.80 per share on February 12th, 2021 to Rs 367.90 per share on February 11th, 2022. The stock has climbed by 39.76 percent in the previous six months, and by 7.59 percent in Friday's trading session. Anand Rathi, a brokerage firm, has issued a buy call on the stock, with a target price of Rs.2,370, after the company's Q3 performance.

Q3 performance of Greenlam Industries

As per the brokerage "Greenlam's Q3 revenue grew 24.4% y/y to Rs4,497m (ARe: Rs3,978m). Its EBITDA and PAT were down y/y 7.9% and 15.8% respectively to Rs534m (ARe: Rs497m) and Rs269m (ARe: Rs276m). The performance was affected by i) the Behror plant shutdown and ii) volatile raw material prices, cutting into margins. The revenue grew on higher realisations and expansion projects on schedule. Environmental issues led to a temporary shutdown of its Behror plant, completely shut from 10th to 16th Dec; then for the rest Dec'21 and in Jan'22 with restrictions (lifted from 4th Feb). Management said ~Rs400m-500m in sales were lost as a result."

According to Anand Rathi "Laminate production was 2.5% y/y lower to 3.88m sheets; volumes sold were 1.7% higher y/y to 3.98m sheets. Average realisation ballooned 33.8% y/y to Rs984 a sheet. In veneers, production was 9.7% lower y/y to 0.3m sq.mtrs; volumes sold were 17.3% lower y/y to 0.3m sq.mtrs. Here too, average realisation climbed, 16.5% y/y to Rs808 a sq.mtr."

Buy for a target price of Rs.2,370

The brokerage has claimed that "We believe the company would deliver revenue/EBITDA/adj. earnings CAGRs of 21%/22.9%/24% over FY21-24 due to the robust business environment and stable input costs, which are likely to cool off in future. We like Greenlam for its bright business prospects, and lean, healthy and strong balance sheet. Hence, we retain our Buy rating on the stock, with an unchanged price target of Rs.2,370."

Disclaimer

The stock has been picked from the brokerage report of Anand Rathi. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.