5X Multibagger Stocks as Premium Pick · Greenply Ltd · Dec18

Greenply

Hi Dost,

So CAD is back in control, US election uncertainity is over as Democrats rule the hill now & FED is keeping interest rate hikes in line with its commitments.

As I talked about Current Account Deficit ( CAD ) in previous pick here

CAD($) = Exports($) - Imports($)

CAD increases when Imports go up ie, for us Majority now days is Crude Oil & Electronic Gadgets. The later one can be controlled by putting increasing import duty which government is unlikely to consider as Lok Sabha elections are coming up.

While Crude Oil has definitely eased up due to many or any factors like ego fight of Saudis n Iran, killing of American reporter in Turkey, Under the table deals of President Donald trump & Crown Prince of Saudi... Who knows.

In Nutshell Crude Oil is down & with current stand of OPEC on inventories it will stabilize soon in little lower area.

On Nov 8th Democrats won the house ie, Hill in US mid-term election giving Mr. Market clarity for next 2 years. It doesnt' matter who runs the government but all Mr. Market loves is certainity.

One of major things that world got reminded in 2018 is that US Investors still rule the Financial world so it is important to keep an eye on US Bond markets.

Federal Reserve Bank is moving interest rate up in line with its commitment.

To my best knowledge everything that could go wrong or bad is already factored in rest depends on Mr. Market when & WHat it wants to surprise us :)

You have this beautiful VG framework of investing. You are invested & investing more n way ahead of others by not being stupid.

Hopping back on agenda let's move ahead n pick up another amazing business as we slowly but surely inch towards our goals

Greenply Ltd.

Value Pick : Summary

About Business :

GIL, incorporated in November, 1990, is one of India’s largest interior infrastructure companies. It is engaged in the manufacturing of plywood and MDF boards.

The company has four manufacturing facilities of plywood in Uttarakhand, Nagaland, West Bengal, and Gujarat with a combined installed capacity of 34.65 million sq. mt. and two manufacturing facilities of MDF in Uttarakhand and Andhra Pradesh with an installed capacity of 5,40,000 cubic meters.

The biggest facility is in the hills of Uttrakhand.

The company’s major brands in the plywood segment are ‘Greenply’ and ‘Green Club’ and in the MDF segment is ‘Greenpanel’.


SWOT Analysis :

Strengths

  • Greenply is one of the largest players in the interior infrastructure sector with its quality product and strong brand image.
  • Greenply's brands like ‘Greenply’ & ‘Green Club’, in the plywood segment and ‘Greenpanel’ in the MDF segment are the one of the leading brands in their respective product categories. The company has also entered the lower segment of plywood through the outsourcing route with the introduction of two new brands ‘Bharosa’ and ‘Jansathi’ during FY18.
  • Pan India presence through a strong distribution network and marketing support
  • Greenply has a pan-India presence with strong distribution network of 1,656 distributors/stockists and 6,000 retailers for plywood and 884 distributors/stockists and 4,000 retailers for MDF across the country. The company’s distribution network is supported by its marketing team which is present across India.
  • Strategic location of all the manufacturing units with strong raw-material linkage. Adequate availability of raw material is a key driver for the plywood and MDF manufacturers. Key raw material required for manufacturing Plywood & MDF includes timber and chemicals.
  • Greenply existing plant are strategically located near to the source of raw-material (i.e. Nagaland, Uttarakhand, and Chittoor (AP)) and adjacent to the port (i.e. Gujarat, Kolkata, and Chittoor (AP)). This ensures adequate availability of raw-material at a competitive cost.
  • While face veneer is a high-quality premium timber, usually derived from matured trees and largely imported, core timber is mainly sourced from the domestic market. As a backward integration initiative, GIL had set up a veneer plant in Myanmar and has already commenced operations of 36,000 cu meter of veneer unit in Gabon, West Africa through a step down subsidiary.
  • Satisfactory capacity utilization (CU). The CU of both Plywood & MDF division remains satisfactory. The CU of Plywood division was 106% in FY18 against 108% in FY17. Furthermore, the capacity utilization of MDF division was 100% in FY18 against 105% in FY17. The CU of plywood and MDF segment stood at 109% and 79% respectively in Q1FY19 vis-à-vis 101% and 117% respectively in Q1FY18.
  • Greenply undertook to set up a new MDF plant in Andhra Pradesh with a capacity of producing 3.60 lakh cubic meter of MDF at a cost of Rs.750 crore which was scheduled to be completed by the end of September’2018. The plant commenced operation from July 1, 2018 within the envisaged cost. The company also commenced a new decorative veneers/decorative plywood plant adjacent to its existing plywood plant at Gujarat with a capacity of producing 2.57 mn sq. mt. in a year from April 18.
  • The remunerations are nominal & are acceptable going forward.

weaknesses

  • Intense competition due to unorganized nature of plywood industry and new capacities in MDF segment
  • Contingent liabilities are around 556 Crores.

Opportunities

  • The anti-dumping duty is beneficial for domestic MDF manufacturers. However, in the recent past the domestic market has witnessed substantial capacity addition which has resulted in price wars in the industry during Q4FY18 and Q1FY19.

threats

  • Sharp fluctuation in cross-currency -$ price is always a risk.


Business Verdict :

With worst almost factored in current valuations of Greenply I believe it has nowhere to go but up only its matter of time.

Greenply Industries Ltd is a Multibagger stock in India. ValueGuyz this stock is a definite premium value pick to consider for your research.


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Got question ?

regards,

jasmeet singh

Founder & Investor

SEBI Regd.(INH100004951)

Jasmeet Singh

About me :

Currently managing assets of 5 Crore+ & still sleep like a baby every night because Valueguyz makes life simpler.

I am passionate about 3 things in my life Financial System, Fitness & Photography

I got introduced to Financial system through Forex Trading back in 2007 during my 3rd Year of Engineering & It was too complex yet magnificent. Officially I entered Indian Stock Market in early 2008 at the very beginning of Global Financial Crisis, but what the hell did I know for me it was the last semester & time to get serious about my passion ie, Counter Strike

Legends :

RoCE : Return on Capital Employed (Effective)

PAT(Avg.) : Net Profit after tax ( Average )

CMP : Current Market Price

MoS : Margin of Safety

Market Cap. : Market Capitalization (Total)

DISCLAIMER

I am a registered Research Analyst with SEBI (INH100004951). My writings n research here at www.valueguyz.com are in accordance with SECURITIES AND EXCHANGE BOARD OF INDIA (RESEARCH ANALYSTS) REGULATIONS, 2014.