Quarterly Update Q3FY21

Century Plyboards (India) Ltd. Record high quarterly profits, strong show across segments

Century Plyboards’ Q3FY21 consolidated revenue/EBITDA grew 9.1%/~274% YoY to

Praveen Sahay
INR660cr/INR124cr. The company reported highest-ever quarterly PAT of INR78cr in Research Analyst
Q3FY21. Revenue and margins of all major segments showed healthy improvement. Gross praveen.sahay@edelweissfin.com
margin for the quarter improved significantly by 300bps to 51.2%, mainly led by laminate
and plywood segments. EBITDA margin improved meaningfully to 18.7% YoY (v/s 5.5% in
Q3FY20; lower margin in Q3FY20 was due to impairment expanses related to PP&E), while
CMP INR: 300
it expanded 220bps QoQ due to improvement in scale of operations. On a consolidated
basis, the company’s profitability expanded significantly on account of (a) higher sales Rating: BUY
and margin expansion, (b) lower interest expenses, and (c) sizeable reduction in Target Price INR 376
borrowings. However, one-time exceptional expense of INR11.81cr related to the Upside: 25%
company’s Assam unit impacted PAT. The company also trimmed its working capital to a
historical low of 51 days (v/s normal level of 70 days). With markets opening across the
country and traction in home improvement products, we are optimistic of the sector’s
growth over the next few years. Maintain ‘BUY’ rating.
Plywood segment seeing healthy traction
Plywood segment (contributing ~55% of sales) grew 10.8%, led by volume growth of 12.6%
due to demand improvement and opening of markets. However, realization in the segment
was down 1.7% YoY, mainly due to product mix changes. Though gross margin improved Bloomberg: CPBI:IN
140bps to 31.2%, Plywood margins fell by 60bps to 11.8% due to one-time exceptional
52-week
expense of INR11.81cr related to the company’s Assam unit. 95 / 303
range (INR):

MDF continues strong performance, Laminates remain on higher margin trajectory Share in issue (cr): 22
MDF (contributing ~18% of sales) continued its growth trajectory as revenues increased
M cap (INR cr): 6,463
20.7% YoY, primarily on account of 18.6% YoY growth in volumes. The realization in MDF
also improved by 1.8% YoY in Q3FY21. Gross margin improved 30bps YoY to 41.2%. This is Promoter
73.05
reflected in the company’s EBITDA margins as well, which improved by 180bps YoY to Holding (%)
27.7%. Laminates (contributing ~18% of sales) showed robust improvement in EBITDA
margin (expanded by 520bps YoY) to 19.4%, on account of lower raw material costs as gross
margin improved by 650bps YoY. Laminates reported growth of 5.8% even as
volumes/realization grew 2.4%/2.6% YoY.

Outlook and valuations: Maintain ‘BUY’

The company has reported record sales and profitability across segments with strong
demand improvement. This is on account of markets opening across India and rollout of the
vaccination program, which led to positive sentiment in the country. The company has
introduced a new strategy to help the sales team, which resulted in strong sales
improvement in Q3FY21. The company has reduced its borrowings to ~INR130cr and
working capital cycle is at a historical low of 51days (v/s normal level of 70 days). Century
Ply is focused on improving throughput from all its existing units (by improving efficiency,
reducing costs and boosting sales) with the help of Boston Consulting Group (BCG). This
should result in healthy improvement in its businesses in the coming days. We have revised
our earnings estimates upwards for FY21/FY22E by 9%/7.6% and introduced FY23E
numbers. We maintain our ‘BUY’ rating with a revised target price of INR376 per share,
valuing the stock at 30x FY23E earnings (average 1-year P/E of last 5 years was 30x).

Particulars (INR cr) Q3FY21 Q3FY20 % change Q2FY21 % change FY20 FY21E FY22E
Net sales 660 605 9% 522 26% 2,317 2,026 2,416
EBITDA 124 33 274% 87 43% 331 323 395
Margin 18.7% 5.5% 16.6% 14.3% 16.0% 16.4%
Adj PAT 78 0 50 54% 122 176 247
Margin 11.8% 0.1% 9.6% 5.3% 8.7% 10.2%
Dil. EPS (INR) 2.9 0.0 5.6 7.9 11.1
Diluted P/E (x) 53x 38x 27x
EV/EBITDA (x) 21x 21x 17x
ROCE (%) 18.7 19.1 21.8 Date: February 11, 2021

Edelweiss Professional Investor Research 1

 Century Plyboards Ltd. Q3FY21 Result Highlights

Particulars (INR cr) Q3FY21 Q3FY20 % change Q2FY21 % change 9MFY21 9MFY20 % change
Income from operations 660 605 9% 522 26% 1383 1768 -22%
Cost of goods sold 322 314 3% 256 26% 673 901 -25%
Employee expenses 89 88 0% 79 12% 224 261 -14%
Other expenses 126 170 -26% 101 24% 275 387 -29%
Total operating expenses 536 572 -6% 436 23% 1172 1549 -24%
EBITDA 124 33 274% 87 211 219 -4%
Depreciation and amortization 18 20 -12% 18 0% 50 54 -8%
EBIT 106 13 713% 69 161 165 -2%
Interest expenses 2 10 -84% 2 -33% 9 30 -70%
Other income 1 1 -6% 1 -5% 7 11 -37%
PBT 106 5 68 160 147 9%
Provision for tax 28 4 18 40 45 -11%
Core profit 78 0 50 119 101 18%
Extraordinary items 12 0 0 12 0
Adjusted net profit 66 0 50 108 101 6%
No. of shares (Cr) 23 23 23 23 23
Diluted EPS (INR) 2.9 0.0 2.2 4.8 4.5 6%

Segment performance
Revenue (INR cr) Q3FY21 Q3FY20 % change Q2FY21 % change 9MFY21 9MFY20 % change
Plywood 356 321 10.8% 267 33.4% 722 953 -24.3%
Laminates 119 113 5.8% 99 20.2% 257 351 -26.6%
MDF 116 96 20.7% 93 24.6% 240 266 -9.7%
Particle Board 26 25 4.3% 26 2.0% 60 76 -21.2%
CFS 21 22 -5.1% 20 4.9% 61 66 -8.0%
Others 14 14 -2.1% 11 25.4% 28 38 -26.3%
EBITDA (INR cr) Q3FY21 Q3FY20 % change Q2FY21 % change 9MFY21 9MFY20 % change
Plywood 42 40 5% 35 20.1% 70 135 -48.1%
Laminates 23 16 44% 14 69.5% 39 46.8 -16.8%
MDF 32 25 29% 26 23.0% 61 64 -4.8%
Particle Board 6 6 1% 6 8.4% 13 21 -40.1%
CFS 6 8 -27% 6 -5.8% 18 22 -18.0%
Others 3 2 75% 2 34.4% 4 4 10.0%
EBITDA margin (%) Q3FY21 Q3FY20 % change Q2FY21 % change 9MFY21 9MFY20 % change
Plywood 11.8% 12.4% -63 13.1% -131 9.7% 14.2% -447
Laminates 19.4% 14.2% 517 13.7% 564 15.1% 13.3% 179
MDF 27.7% 26.0% 177 28.1% -36 25.3% 24.0% 132
Particle Board 23.1% 23.8% -67 21.8% 138 20.8% 27.4% -656
CFS 26.6% 34.7% -811 29.6% -302 30.2% 33.9% -366
Others 19.0% 10.6% 833 17.7% 126 13.8% 9.3% 457

Revised Estimates
FY21E FY22E
(INR cr)
Old Revised Change (%) Old Revised Change (%)
Net sales 1,912 2,026 6.0 2,369 2,416 2.0
EBITDA 300 323 7.7 391 395 1.1
EBITDA margin (%) 15.7 16.0 16.5 16.4
PBT 209 251 20.1 298 320 7.6
PBT margin 10.9 12.4 12.6 13.3
Net profit 161 176 8.9 229 247 7.6
Adj EPS (Rs) 7.2 7.9 8.9 10.3 11.1 7.6

Edelweiss Professional Investor Research 2

Century Plyboards Ltd. Q3FY21 Result Highlights

Financial Charts

Plywood Volume ('000 CBM) Plywood margins

40%
67.5
56.5 56.6 57.7 30%
53.4 54.5 55.9
50.6 49.3
20%

10%

18.0 0%

Q3FY19

Q4FY19

Q1FY20
Q2FY19

Q2FY20

Q3FY20

4FY20

Q1FY21

Q2FY21

Q3FY22
-10%
Q3FY19
Q2FY19

Q4FY19

Q1FY20

Q2FY20

Q3FY20

4FY20

Q1FY21

Q2FY21

Q3FY22
EBITDA Margins Gross Margins

Laminate Volumes ('000) Laminate Margins

1815 45%
1594 1582 40%
1487 1463 1546 35%
1401 1400 1410
30%
25%
20%
15%
565 10%
5%
0%
Q2FY19

Q3FY19

Q4FY19

Q1FY20

Q2FY20

Q3FY20

4FY20

Q1FY21

Q2FY21

Q3FY22
Q2FY19

Q3FY19

Q4FY19

Q1FY20

Q2FY20

Q3FY20

4FY20

Q1FY21

Q2FY21

Q3FY22

Gross Margins EBITDA Margins

MDF Realization per CBM) MDF Margins

21,900 22,298
21,900 30%
21,682
25%
21,300 21,900 20%
21,000 21,760
20,740 15%
20,100 10%
5%
0%
Q2FY19

Q3FY19

Q4FY19

Q1FY20

Q2FY20

Q3FY20

4FY20

Q1FY21

Q2FY21

Q3FY22

Q2FY19

Q3FY19

Q4FY19

Q1FY20

Q2FY20

Q3FY20

Q1FY21

Q2FY21

Q3FY22
4FY20

Source: Edelweiss Wealth Research

Edelweiss Professional Investor Research 3

 Century Plyboards Ltd. Q3FY21 Result Highlights

Previous Result Outlook

Q1FY21: While Q1FY21 has been challenging for the company as it had to face the twin challenges of COVID19 led lockdown &
Amphan, the company has responded pro-actively by extending credit to the dealers, launch of VIROKILL technology in Plywood
and Laminates which is advertised to kill viruses on the surface of plywood & laminates. Further, the company is hopeful of a
longer-term demand traction to get generated out of the Atma-Nirbhar initiative of Government which is expected to aim at
reducing the imports of furniture. The sales in the month of July has rebounded to the tune of ~75% & the company is hopeful of
delivering ~100% of the sales level of last year by Q4FY21. The company has very lean capex plan for the upcoming 1-2 years as
only the MDF capacity expansion is the major planned capex. We value the company at 20x FY22E P/E and maintain buy with a
target price of INR 187 per share.

Q2FY21: While the company reported de-growth on the revenue & profit fronts but the performance has been relatively better
than expectation. On balance sheet front, debt level reduced from INR 244 cr. at the end of Q1FY21 to INR 85.1 cr. at the end of
Q2FY21. Also, working capital cycle normalised to 70 days after it went haywire in Q1FY21 & increased to 199 days. The sales in
the month of October has been the best that company has reported in its history. Further, the company is hopeful of a longerterm
demand traction to get generated out of the initiatives of Government which is aimed at reducing the imports of furniture. We
have upward revised our FY22 earnings estimate by 10.3%, but downgrade to hold post recent up-move with a revised TP of INR
206 per share valuing the company at 20x FY22E P/E.

Q1FY21 Q2FY21

Edelweiss Professional Investor Research 4

Century Plyboards Ltd. Financials

Income statement (INR crs)

Year to March FY19 FY20 FY21E FY22E FY23E
Income from operations 2,280 2,317 2,026 2,416 2,713
Direct costs 1,151 1,161 996 1,187 1,333
Employee costs 346 358 312 362 407
Other expenses 482 467 395 471 529
Total operating expenses 1,979 1,986 1,703 2,021 2,269
EBITDA 301 331 323 395 444
Depreciation and amortisation 59 76 70 77 84
EBIT 242 255 253 318 360
Interest expenses 47 39 11 8 8
Other income 7 13 9 10 10
Profit before tax 202 229 251 320 362
Provision for tax 53 52 64 74 83
Core profit 149 177 187 247 279
Extraordinary items 0 -51 -12 0 0
Profit after tax 149 126 176 247 279
Minority Interest -3 -3 0 0 0
Share from associates 0 0 0 0 0
Adjusted net profit 146 122 176 247 279
Equity shares outstanding (cr) 22 22 22 22 22
EPS (INR) basic 7 5.6 7.9 11.1 12.5
Diluted shares (Cr) 22 22 22 22 22
EPS (INR) fully diluted 6.7 5.6 7.9 11.1 12.5
Dividend per share 1 1 1 1 1
Dividend payout (%) 12 15 12 12 12

Common size metrics- as % of net revenues

Year to March FY19 FY20 FY21E FY22E FY23E
Operating expenses 86.8 85.7 84.0 83.6 83.6
Depreciation 2.6 3.3 3.5 3.2 3.1
Interest expenditure 2.1 1.7 0.5 0.3 0.3
EBITDA margins 13.2 14.3 16.0 16.4 16.4
Net profit margins 6.4 5.3 8.7 10.2 10.3

Growth metrics (%)

Year to March FY19 FY20 FY21E FY22E FY23E
Revenues 10.7 1.6 (12.6) 19.3 12.3
EBITDA (9.3) 10.0 (2.4) 22.3 12.3
PBT (5.6) 13.1 10.0 27.4 13.0
Net profit (11.8) 18.5 6.1 31.7 13.0
EPS (11.8) (15.8) 39.9 40.6 13.0

Edelweiss Professional Investor Research 5

Century Plyboards Ltd. Financials

Balance sheet (INR cr)

As on 31st March FY19 FY20 FY21E FY22E FY23E
Equity share capital 22 22 22 22 22
Preference Share Capital 0 0 0 0 0
Reserves & surplus 953 1,068 1,231 1,445 1,687
Shareholders funds 975 1,091 1,253 1,467 1,709
Secured loans 482 265 265 215 165
Unsecured loans 0 0 0 0 0
Borrowings 482 265 155 155 155
Minority interest 25 -2 -2 -2 -2
Sources of funds 1,483 1,354 1,407 1,621 1,863
Gross block 1,091 1,109 1,199 1,349 1,449
Depreciation 255 331 402 479 562
Net block 836 777 797 870 886
Capital work in progress 27 16 16 0 0
Total fixed assets 863 793 813 870 886
Unrealised profit 0 0 0 0 0
Investments 7 8 8 26 126
Inventories 461 398 333 397 483
Sundry debtors 296 257 250 298 334
Cash and equivalents 26 25 71 56 97
Loans and advances 19 21 80 80 80
Other current assets 78 101 88 150 150
Total current assets 881 801 822 981 1,144
Sundry creditors and others 316 291 277 298 334
Provisions 12 14 15 16 17
Total CL & provisions 328 305 293 314 351
Net current assets 553 496 529 667 793
Net Deferred tax 60 57 57 57 57
Misc expenditure 0 0 0 0 0
Uses of funds 1,483 1,354 1,407 1,621 1,863
Book value per share (INR) 44 49 56 66 77
-0 -0 0 0 0
Cash flow statement (INR crs)
Year to March FY19 FY20 FY21E FY22E FY23E
Net profit 149 126 176 247 279
Add: Depreciation 59 76 70 77 84
Add: Misc expenses written off/Other Assets 0 0 0 0 0
Add: Deferred tax 11 3 0 0 0
Add: Others -3 -3 0 0 0
Gross cash flow 216 202 246 324 363
Less: Changes in W. C. 11 -55 -13 153 85
Operating cash flow 204 257 259 171 277
Less: Capex 149 90 90 150 100
Free cash flow 55 167 169 21 177

Edelweiss Professional Investor Research 6

Century Plyboards Ltd. Financials

Ratios
Year to March FY19 FY20 FY21E FY22E FY23E
ROAE (%) 16 17 16 18 18
ROACE (%) 18 19 19 22 21
Debtors (days) 47 40 45 45 45
Current ratio 2 2 3 3 3
Debt/Equity 0.5 0.2 0.1 0.1 0.1
Inventory (days) 74 63 60 60 65
Payable (days) 51 46 50 45 45
Cash conversion cycle (days) 71 57 55 60 65
Debt/EBITDA 2 1 0 0 0
Adjusted debt/Equity 0.5 0.2 0.1 0.1 0.0

Valuation parameters
Year to March FY19 FY20 FY21E FY22E FY23E
Diluted EPS (INR) 6.7 5.6 7.9 11.1 12.5
Y-o-Y growth (%) (11.8) (15.8) 39.9 40.6 13.0
CEPS (INR) 9.3 11.4 11.6 14.5 16.3
Diluted P/E (x) 45 53 38 27 24
Price/BV(x) 6.8 6.1 5.3 4.5 3.9
EV/Sales (x) 3.1 3.0 3.3 2.8 2.5
EV/EBITDA (x) 23.7 20.9 20.9 17.1 15.2
Diluted shares O/S 22.3 22.3 22.3 22.3 22.3
Basic EPS 6.7 5.6 7.9 11.1 12.5
Basic PE (x) 44.8 53.2 38.0 27.1 24.0
Dividend yield (%) 0.2 0.4 0.3 0.4 0.4

Edelweiss Professional Investor Research 7

Century Plyboards Ltd.

Edelweiss Broking Limited, 1st Floor, Tower 3, Wing B, Kohinoor City Mall, Kohinoor City, Kirol Road, Kurla(W)
Board: (91-22) 4272 2200

Vinay Khattar
VINAY
Digitally signed by VINAY KHATTAR
DN: c=IN, o=Personal, postalCode=400072,
st=MAHARASHTRA,
Head Research serialNumber=cd5737057831c416d2a5f7064cb693

vinay.khattar@edelweissfin.com KHATTAR 183887e7ff342c50bd877e00c00e2e82a1,

cn=VINAY KHATTAR
Date: 2021.02.11 18:49:37 +05'30'

Rating Expected to

Buy appreciate more than 15% over a 12-month period

Hold appreciate between 5-15% over a 12-month period

Reduce Return below 5% over a 12-month period

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Century Ply Sensex

Edelweiss Professional Investor Research 8

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Edelweiss Professional Investor Research 9

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