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Target: ₹780
CMP: ₹701.60
Key takeaways from Century Plyboards’ (CPBI) FY23 annual report: Targeting revenue to register a 16 per cent CAGR (vs. 12 per cent in the past decade) to reach ₹12,000 crpre by FY31; MDF and particle-board revenue to grow higher (at 23-27 per cent CAGR) to contribute 35-45 per cent to the revenue mix (vs. 22 per cent in FY23) by FY31; CPBI’s growth impulse reviving and the company will deploy over 70 per cent capex (₹2,000 crore over FY22-25 vs. ₹1,050 crore in the past 37 years) in the high-growth MDF and particle-board segments; and CPBI gained market share in the overall wood panel segment by 100bps y-o-y to 8 per cent in FY23.
The company will deepen its focus on capacity expansion; product innovation; increasing brand spending; usage of data science, digitisation, better sales and distribution management, and ESG. The substantial investment will be majorly funded through internal accruals and will help to maintain its leadership position, generate better margins, and 20 per cent RoCE going ahead.
We have a BUY rating on the stock with a Jun-24 target price of ₹780/share, based on 32x its P/E.
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