Anand Rathi’s research report on Century Plyboards
Held back primarily by poor margins in MDF (more pricing pressure because of increased industry capacity) and in laminates (higher input costs), Century?s Q2 was weak, with PAT down 6% y/y. Besides, the depreciating rupee played a role (at the PBT level, forex loss of `108m). Plywood, on the other hand, did better. For these reasons, we cut our FY19e and FY20e earnings respectively 9.3% and 6.7%. Expecting a gradual recovery in margins (on a price hike in laminates and normalisation of pricing pressure in MDF), we now expect 15% and 26% CAGRs over FY18-20 in respectively revenue and PAT. We maintain a Buy with a lower target price of `225 (20x FY20e P/E).