| Recommend Price | Rs 717 |
|---|---|
| Target (Rs) | Rs 825 |
| Potential Upside (%) | 15% |
| Investment period | 12 Months |
Century Plyboards, established in 1986, has become the top company in India for selling various plywood and decorative products like doors, laminates, and veneers. They’re known for their high-quality, durable products that are resistant to water and pests, making them a popular choice in the lifestyle market.
With a wide range of products, they offer everything needed for building and decorating spaces, making them a go-to for both trade partners and customers. The company leads the organised plywood market in India with a 29% market share.
They manufacture their products across India in locations like West Bengal, Assam, Gujarat, Tamil Nadu, Haryana, and Punjab, and also have units in Uttarakhand, Laos, and Gabon, managed through subsidiaries.
Based in Kolkata, Century Plyboards has a strong distribution network with over 3,848 partners across India, ensuring their products are widely available.
Why should one invest in Century Plyboards?
Expanding in the growing Medium-density fibreboard (MDF) segment to drive growth
Century Plyboards is planning to significantly increase its production of Medium-density fibreboard (MDF), aiming to become the second-biggest MDF maker in India within the next 1-2 years.
This decision is designed to take advantage of increasing demand for MDF, a popular material in furniture making. Although the company may face some challenges in the short term, like competition and high raw material costs, the overall outlook for MDF is positive.
From February 2024, new regulations will make it harder for foreign MDF to compete with domestic products, which is good news for companies like Century Plyboards. Despite current price pressures, the demand for MDF is expected to stay strong due to trends like the growing popularity of ready-made furniture and online shopping, as well as more people choosing to buy from well-known brands.
Capex in other businesses to bear fruit in future
Century Plyboards (India) is investing between 1.2 and 1.3 billion rupees in the next 12 to 18 months to grow its business, especially focusing on the furniture industry. This move is strategic, especially during times when the market isn’t doing great and costs are lower, allowing the company to prepare for when the market gets better.
They’re planning to expand their plants and believe that even though people are buying less right now, sales will start picking up from the second quarter of the financial year 2025.
They’ve already started increasing their laminate production and plan to add more capacity next year, which they expect will bring in an extra 2 to 3 billion rupees in sales. This is all part of their bigger plan to become more competitive and take advantage of future opportunities in the market.
Valuation and Outlook
Century Plyboards (India) has grown to be the biggest company in India that makes various wood panel products, with a wide range of products and a strong brand name. The company is set to make more money and profits continuously, especially since new rules starting February 2024 will make it harder for imported MDF and Particle Board to compete, which is good news for Indian companies like Century Plyboards.
They plan to expand their production of modern products like MDF and Particle Board and launch affordable products in smaller cities to take business away from less formal, smaller competitors.
Thanks to growing incomes, more people moving to cities, a preference for well-known brands, and people wanting to replace things more often, companies like Century Plyboards are in a good position to do well in the future. With its wide product range, large sales network, famous brand, strong finances, and good investment returns, we recommend buying Century Plyboards shares, expecting the price could go up by 15% in the next 12 months to reach a target of Rs 825 based on our calculations.
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