₹42 to ₹625: Low Debt Multibagger Stock Gave 1,370% Return – HDFC Securities Says BUY

Low Debt Multibagger Stock: The post-covid bull run created many multibagger stocks, and Greenpanel Industries is one of them. Greenpanel Industries is low Debt multibagger smallcap stock.

As of April 2023, shares of Greenpanel Industries Limited are trading at a low PE ratio of 12. A low Debt To Equity ratio of 0.21 and a High ROCE of nearly 30% makes the stock of Greenpanel Industries even more attractive.

Is Greenpanel Industries Part Of Greenply Industries?

Greenpanel Industries was the Medium Density Fiberboard (MDF) manufacturing arm of Greenply Industries. And on 22nd March 2018, the board of Greenply Industries approved the demerger Of Greenpanel Industries.

Later, on 23rd October 2019, Greenpanel Industries, the demerged entity of Greenply Industries, was listed on the Indian stock exchanges and initiated trading on the stock market.

For every share held, Greenply Industries’ shareholders got one share of Greenpanel Industries. The demerger was on the ratio of 1:1.

Multibagger Returns Generated By Greenpanel Industries

On the first day of trading, i.e., 23rd October 2019, shares of Greenpanel Industries opened at ₹42.55/- and closed the trading day at ₹40.45/-.

On 29th April 2022, the stock price of Greenpanel Industries reached its All-Time High price of ₹625.70/-, generating a return of 1,370.50% from its first-day opening price.

Within 30 months, Greenpanel Industries gave a multibagger return of 1,370.50%.

An investment of ₹1 Lakh in Greenpanel Industries at a price of ₹42.55/- per share would have fetched 2,350 shares.

Redeeming those 2,350 shares of Greenpanel Industries at the peak price of ₹625.70/- per share would have ballooned the investment of ₹1 Lakh to ₹14,70,395/-.

And on 13th April 2023, after touching its recent 52 Week Low of ₹255.00/-, shares of Greenpanel Industries closed at ₹274.65/-. Down 0.81% on an intraday basis.

Fundamental Analysis Of Greenpanel Industries

Greenpanel Industries is a smallcap company with a market capitalization of ₹3,361 Crore that manufactures MDF, Plywood, Veneers, and other wood fiber materials.

Compared to other listed companies in the Wood and Timber industry, Greenpanel Industries is trading at a low PE of 12.

For some perspective, during April and May of 2021, shares of Greenpanel Industries were trading at a PE ratio of 92.

The company has been maintaining a very healthy ROCE (Return On Capital Employed) since listing, and according to the latest quarterly report, the ROCE of Greenpanel Industries stands at 29.70%.

By utilizing all its assets carefully, Greenpanel Industries have generated a handsome ROE (Return On Equity) of 28.8% for its investors in the 12 months. And the three years average ROE of Greenpanel Industries stands at 15%.

As of September 2022, the total debt of Greenpanel Industries stands at ₹227 Crore, and the company is constantly decreasing its borrowings.

To judge the rate at which the company is lowering its borrowing, the total debt of Greenpanel Industries stood at ₹587 Crore at the end of March 2019.

Against ₹227 Crore of debt, the reserve of Greenpanel Industries stands at ₹1,091 Crore as of September 2022, covering both the short-term and long-term borrowings of the company.

At the year-end on March 2022, the revenue of Greenpanel Industries stood at ₹1,625 Crore. And with an Operating Profit Margin of 27%, the Net Profit stood at ₹240 Crore.

For a Y-o-Y comparison, the company’s revenue for the year ending on March 2021 was ₹1,021 Crore. And the Net Profit of Greenpanel Industries for the same year stood at a mere ₹69 Crore.

Promoters of Greenpanel Industries hold more than 53% shares of the company as of December 2022. And Foreign Institutional Investors and Domestic Institutional Investors both have significant stakes in the company.

As of Dec ’22, FIIs hold 4.56% shares of the Greenpanel Industries, whereas DIIs have a 21.30% stake in the company.

Greenpanel Industries Share Price Performance And Return

The year 2023 and 2022 have not been kind to most of the smallcap stocks, and investors and traders have not shown any mercy to the shares of Greenpanel Industries.

Since May 2022, the stock of Greenpanel Industries is continuously trending downwards.

On YTD (Year-to-Date) basis, Greenpanel Industries is down nearly 20%.

The yearly share price chart of Greenpanel Industries shows that the stock is down 51.13%.

But on the three-year chart, the share price of Greenpanel Industries is up 845.44%. And the share price of Greenpanel Industries on the All-Time chart is up by 545%.

The stock price of Greenpanel Industries looks range bound on the one-month chart. Greenpanel Industries is trading between the price range of ₹285/- and ₹255/- on the monthly chart.

Investment Of ₹1 Lakh in Greenpanel Industries

On 2nd January 2023, the share price of Greenpanel Industries was ₹342.60/-. An investment of ₹1 Lakh would have fetched 291 shares of Greenpanel Industries.

As on 13th April 2023, the value of the 291 shares of Greenpanel Industries is ₹79,923.15/-. On a YTD basis, an investment of ₹1 Lakh in Greenpanel Industries is down by 20.07%.

On a yearly time frame, the return generated by Greenpanel Industries is also in the negative zone.

On 18th April 2022, shares of Greenpanel Industries closed at a price of ₹580.20/-. An investment worth ₹1 Lakh would have fetched 172 shares of the multibagger stock.

And after a year, on 13th April 2023, the value of those 172 shares of Greenpanel Industries is ₹47,239.80/-. Investment in Greenpanel Industries is down by 52.76% within a year.

However, if we look at the 3-Year time frame, shares of Greenpanel Industries have generated multibagger returns.

3 years ago, on 13th April 2020, shares of Greenpanel Industries closed at ₹29.00/-. And an investment of ₹1 Lakh in Greenpanel Industries would have fetched 3,448 shares.

And after three years, the value of those 3,448 shares is ₹9,46,993.20/-. The investment of ₹1 Lakh in Greenpanel Industries within three years rose by 846.99%.

Similarly, investors who bought shares of Greenpanel Industries on the listing day are now sitting on a profit of more than 545%.

On the listing day, i.e., 23rd October 2019, shares of Greenpanel Industries closed at ₹40.45/-.

An investment of ₹1 Lakh would have fetched 2,472 shares of the low-debt multibagger stock.

As of 13th April 2023, the value of those 2,472 shares of Greenpanel Industries would have soared to ₹6,78,934.80/-, thus generating a return of 578.93%.

Investors who invested in Greenpanel Industries 3 years ago or when the stock was listed saw their wealth multiply numerous times. Investor’s wealth within those time frames grew by 8.46 times and 5.78 times, respectively.

Why is Greenpanel Industries Share Price Falling?

The reason behind the share price fall of Greenpanel Industries is its 3rd quarter’s result. The company reported a profit of ₹38 Crore in the December quarter of 2022.

In the September quarter of 2022, Greenpanel Industries reported a total Net Profit of ₹72 Crore. Comparing sequentially, the company’s Net Profit is down by 48%.

Comparing on a Y-o-Y basis, the Net Profit of Greenpanel Industries for the Q3 quarter of 2023 is down by more than 39%. In the December quarter of 2021, Greenpanel Industries reported a Net Profit of ₹63 Crore.

Imports also played a significant role in the disastrous Q3 result reported by the company.

According to the management of Greenpanel Industries, demand for MDF and its allied products remains strong, but a recent increase in imports has dented their domestic business.

The current high-inflation environment around the globe has also impacted the export business of Greenpanel Industries.

Is Greenpanel Industries A Good Buy?

Taking a cue from multiple brokerage reports, it seems shares of Greenpanel Industries at the price of ₹274/- is a good buy.

According to brokerage research reports from Systematix Institutional Equities, Yes Securities, HDFC Securities, and ICICI Securities, ₹270/- to ₹300/- is a good buying zone.

All of the above brokerage research reports suggest that investors of Greenpanel Industries can expect at least a 50% upside.

What Is The Future Of Greenpanel Industries Share?

The recent downward slide of Greenpanel Industries’ shares might have dented investors’ sentiment, but market experts have an optimistic view of the company’s future.

Systematic Institutional Equities believes that the 50%+ fall in the share price of Greenpanel Industries is a bit too much, and at the current share price of ₹274/-, the stock seems oversold.

The brokerage has a “Buy” rating on the company and expects the share price target of Greenpanel Industries to be ₹455/-.

The research report from Yes Securities on Greenpanel Industries suggests an upside of 62.40% from its current share price of ₹274/-.

The caption of the research report from Yes Securities reads – “Imports continue to hurt domestic performance!”.

But the brokerage also states, “We believe, MDF industry will continue to grow at CAGR of 15‐20% for next‐5 years & GREENP will be one of the biggest beneficiaries of the same.”

Yes Securities has a “Buy” rating on Greenpanel Industries and an expected target price of ₹445/- per share, which suggest a 62.40% upside.

Similarly, HDFC Securities also has a “Buy” rating on Greenpanel Industries, and the brokerage expects a target price of ₹430/- per share.

HDFC Securities, the 6th largest stock broker in India, states in the report, “We maintain our BUY rating on Greenpanel Industries, with an unchanged target price of INR 430/share.”

The research report also reads, “We like Greenpanel for its leadership positioning in the high-growth MDF segment, superior margin, and working capital profile (most efficient among peers).”

A target price of ₹430/- per share for Greenpanel Industries means investors can see a potential upside of nearly 57% in the future.

The research report from ICICI Securities on Greenpanel Industries states that the brokerage maintains its “Buy” rating on the MDF manufacturing company with a target price of ₹532/- per share.

A target price of ₹532/- per share indicates a potential upside of 94.16% from the current Greenpanel Industries’ share price of ₹274/-.

Earlier, ICICI Securities had a share price target of ₹668/- for Greenpanel Industries, but in the latest report, the brokerage revised it to ₹532/-.

In the research report, the brokerage states, “We cut our PAT estimates by ~7%/-9% over FY23-25E and maintain BUY with a rolled over Mar’24 target price of Rs532 set at 20x PER (vs 23x earlier).”

But the brokerage is optimistic about the cashflow generation of the company as expressed through these lines, “While Q3 was a dull quarter, the key positive was high cashflow generation of Rs940mn.”

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