Undervalued Stock: Shares of Greenpanel Industries [NSE: GREENPANEL] have been underperforming for the last 1-year. And the stock of this MDF (Medium Density Fibreboard) manufacturer has been trending downwards since May 2022. But recently, a breakout was observed in the stock price of Greenpanel Industries, and in the last 1-month, shares of Greenpanel Industries have generated a return of more than 8.94% for its investors.
According to stock experts and research analysts, at the moment, Greenpanel Industries is an undervalued stock. And after the recent breakout in the stock price, and with the bullish momentum, the stock price of Greenpanel Industries might breach the ₹400/- mark soon.
On 06th May 2023, Greenpanel Industries reported its financial results for the fourth quarter, and the financial year ended on 31st March 2023. The company performed better than the street’s estimates, propelling the stock price further.
About Greenpanel Industries
Greenpanel Industries is in the business of wood and wood products. The company was the MDF manufacturing arm of Greenply Industries, which later de-merged into a separate entity. Greenpanel Industries is the leading MDF manufacturer in India, and the company has the highest production capacity among all its peers.
Greenpanel Industries Financial Results
On 06th May 2023, Greenpanel Industries reported its Q4 FY23 financial result. The numbers for the fourth quarter were better than the street’s estimate.
The company reported Net Sales of ₹441.41 Crore against ₹470.08 Crore for the quarter that ended on March 2022, down 6.1% on a Y-o-Y basis. But the Net Sales were up 5.05% on a sequential basis against ₹420.16 Crore reported for the quarter ended on December 2022.
The Net Profit of Greenpanel Industries for the March 2023 quarter stood at ₹68.93 Crore against ₹80.59 Crore for the March 2022 quarter, down 14.48% on a Y-o-Y basis. But the Net Profit was up 83.66% on a sequential basis against ₹37.53 Crore reported for the quarter ended on December 2022.
The EPS (Earnings Per Share) of Greenpanel Industries also saw an improvement on a sequential basis. The company reported an EPS of ₹5.62/- for the March 2023 quarter against ₹3.06/- for the quarter that ended in December 2022, up 83.66% on a sequential basis.
But the reported EPS of Greenpanel Industries for the March 2023 quarter was down by 14.46% on a Y-o-Y basis. For the quarter that ended on March 2022, Greenpanel Industries reported an EPS of ₹6.57/-.
Investment of ₹1 Lakh In Greenpanel Industries
A month ago, on 20th April 2023, shares of Greenpanel Industries closed the trading day at ₹299.80/- a piece. And on 19th May 2023, the share price of Greenpanel Industries closed the day at ₹326.60/- per share.
An investment of ₹1 Lakh a month ago would have fetched 333 shares of Greenpanel Industries. And as of 19th May 2023, the value of 333 shares of Greenpanel Industries stands at ₹1,08,757.80/-.
A year ago, on 20th May 2022, shares of Greenpanel Industries closed the trading day at ₹497.10/- per share.
A year ago, an investment of ₹1 Lakh in Greenpanel Industries would have fetched 201 shares. And as of 19th May 2023, the value of 201 shares of Greenpanel Industries would be ₹65,646.60/-, down more than 34%.
While on a 3-year time frame, shares of Greenpanel Industries gave multibagger returns.
Three years ago, on 20th May 2020, Greenpanel Industries’s shares closed the trading day at ₹24.85/- a piece.
An investment of ₹1 Lakh in Greenpanel Industries would have fetched 4,024 shares three years ago. And as of 19th May 2023, the value of 4,024 shares of Greenpanel Industries would be 13,14,238.40/-.
Greenpanel Industries gave more than 13x Returns in 3 years.
Should You Invest In Greenpanel Industries?
According to multiple brokerage reports, Greenpanel Industries is an undervalued stock, and at a price ranging between ₹300/- and ₹325/-, shares of Greenpanel Industries are a good buy. Investors can expect returns in the range of 33% to 42%.
According to a recent research report by HDFC Securities, Greenpanel Industries seems a good investment option as the broker expects a target price of ₹430/- per share.
In the research report, HDFC Securities states – “We maintain our BUY rating with an unchanged target price of INR 430/share…We like Greenpanel for its leadership positioning in the MDF segment, its large retail presence (85% in FY23), superior margin, and working capital profile.”
HDFC Securities also had an opinion on the quarterly performance of Greenpanel Industries for Q4FY23.
In the research report, it said – “In our view, the domestic margin remained buoyant at ~25-26%, while the overall margin is dented by exports (sub 5% margin). Ply sales volume fell 17% YoY (+2% QoQ) amid the restructuring exercise.”
Yes Securities also published its research report on Greenpanel Industries after its 4th quarter result for FY2023.
According to the research report from Yes Securities, the broker expects the target price of Greenpanel Industries shares to be ₹449/- per share.
The report states – “We expect MDF volumes to grow by 13%CAGR over FY23-FY25E on account of rapid acceptance of MDF in domestic industry & realizations to degrow by 4%, hence revenue should grow by 9% CAGR over similar period.”
The report also had a statement about the current stock price of Greenpanel Industries.
“At CMP, stock has factored the multiple headwinds which are likely to impact GREENPs performance & hence its trading at P/E(x) of 14.7x/12.4x on FY24/FY25E EPS of Rs18.9/22.2 respectively.” – said in the report.
Evidently, Yes Securities has a BUY call on Greenpanel Industries – “We have valued the stock at 20x on FY25E EPS & arrived at a target price of Rs449, retaining our BUY rating.”
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