This Plywood Stock Is Down 30% In 6 Months And Analyst Sees Massive Opportunity

Analysts at ICICI Securities noted that Century Plywood has strong growth prospects and a healthy balance sheet that can prove beneficial in the long term.

The Century Plywood Analyst: Analysts at ICICI Securities led by Arun Baid maintained their ‘buy’ rating for the stock with a price target of ₹758 – an over 57% upside from the stock’s last closing price of ₹479.45.

The Century Plywood Thesis: The brokerage firm in its latest research report stated that while the company is facing several demand and margin headwinds in the near term, it can stage a comeback with the uptick in the housing market. Analysts at ICICI Securities met with the company’s management who hinted that demand for plywood and medium-density fiberboard (MDF) is seeing a QoQ rise in Q4.

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As per the brokerage firm, the plywood maker’s margins are expected to improve QoQ due to operating leverage and a 2% price hike in the plywood segment. The price hike is expected to mitigate the increased cost of timber to some extent.

The analysts noted that the company has strong growth prospects, high return ratios, and a healthy balance sheet and they “believe it will potentially be a major beneficiary of the uptick in housing demand
and higher spend on home improvement post the pandemic.”

However, the firm warned that a slowdown in the housing market and higher input prices may impact the company’s profitability and growth.

Price Action: Century Plywood shares were down 1.49% to trade at ₹472.30 in the mid-market hours of trading on Monday.

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Posted In: Century PlywoodICICI SecuritiesPlywoodQ4FY23