Sharekhan Recommends To Buy This Laminates Stock For 21% Returns

The building materials industry has been severely affected by the Covid during Q1FY2021, which had affected its peak sales period of the year. However, the industry is expected to rebound and recover with strong growth in FY2022. The renowned brokerage firm Sharekhan in a recent report has recommended to buy stocks of Greenlam Industries with a potential return of 21%, within a target period of 1 year.

Target Price

The Current Market Price (CMP) of Greenlam is Rs. 1758. The brokerage firm, Sharekhan Recommends has estimated a Target Price for the stock at Rs. 2127. Hence the stock is expected to give a 21% return, in a Target Period of 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 1758
Target Price	Rs. 2127
1 Year returns	21.00%

Company performance

Greenlam estimates to generate Rs. 2000-2100 crore revenues from its existing business while new businesses will add Rs. 1500 crore, aggregating to Rs. 3500-3600 crore revenues by FY 2026, Sharekhan thinks. "The company expects 13-14% OPM for the plywood segment, 22-24% for particleboard segment, while for the laminates segment, margins would be at current levels. Greenlam, with its dominant industry position in laminates, is expected to be among top 3 players in Plywood and leader in Particle board," the brokerage firm stated.

Comments by Sharekhan

Sharekhan said, "The company is expected to ride on strong growth, being envisaged for the wooden furniture industry, which is expected to post a 12% CAGR over 2020-2023." The firm added, "We expect Greenlam to grow at a faster pace, benefiting from market share gains that arise from the unorganised sector, leveraging its strong distribution network. The government's focus on making India an export hub provides strong export growth opportunities for Greenlam."

About the company

Greenlam is Asia's largest, and India's number 1 surfacing solutions brand. With its presence in over 100 countries, Greenlam has a team of over 14,000 distributors and dealers along with more than 4,500 employees. Greenlam is a joint leader in the Rs. 5,700 crore laminates industry with a market share of ~20%.

Disclaimer

The above stock was picked from the brokerage report of Sharekhan. 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.

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