Multibagger stock turns ₹1 lakh to ₹11 lakh in 5 years: Should you buy?

The shares of Greenpanel Industries started trading on the NSE today at ₹425.00 a piece and were last spotted at ₹418.55, with a downside gap of 2.24%

3 min read . Updated: 26 Sep 2022, 01:24 PM IST Vipul Das

With a market capitalization of Rs. 5,117.85 crore, Greenpanel Industries Ltd. is a mid-cap company that operates in the consumer discretionary industry

Share price history of Greenpanel Industries

The shares of Greenpanel Industries started trading on the NSE today at ₹425.00 a piece and were last spotted at ₹418.55, with a downside gap of 2.24%. The stock price has risen significantly in the last five years, rising from ₹36.55 on October 25, 2019, to the current market price, resulting in a multibagger return of 1,045.14% and an approximate CAGR of 63.30%. Therefore, a ₹1 lakh investment placed in the stock five years ago would have now yielded an ₹11.45 lakh investment return.

The stock has gained 31.68% over the past year, but YTD, it has dropped 0.12% in 2022. On the NSE, the stock had touched a 52-week-high of ₹625.70 on (29-April-2022) and a 52-week-low of ₹303.20 on (29-September-2021), indicating that at the current price level the stock is trading 34% below the high and 36% above the low. For the quarter ended June 2022, the company recorded a promoter shareholding of 53.10%, FIIs holding of 6.27%, DIIs holding of 21.45%, and public shareholding of 19.18%.

Should you buy the shares of Greenpanel Industries?

The research analysts of the broking firm ICICI Securities have said in their research note that “Our positive stance on Greenpanel Industries (GREENP) stands bolstered post our interactions with dealers and industry participants indicating MDF demand remains healthy and continues to grow in double digits YoY (in the ongoing quarter too) despite a YoY strong base. The growth in MDF continues to be driven by increase in demand for readymade furniture even post-pandemic. Also, the pick-up in housing market seen after the pandemic has further aided demand growth. As per industry participants, imports of MDF have not yet gathered pace and this is likely to remain so in the near term too because MDF prices in the international markets remain high. MDF players have not taken any price hike in Q2FY23-TD despite raw material price inflation, hence margins will likely contract QoQ/YoY (in line with management guidance). We have factored-in margins of 26.2% for 9MFY23E for the MDF segment (vs 33.3% in Q1FY23) and do believe it has upside risk if raw material prices soften. GREENP is expected to witness revenue/PAT CAGRs of 15.6%/21.3% over FY22-FY24E driven by MDF volume CAGR of 14%. Maintain BUY with an unchanged Mar’23E target price of Rs662, set at a P/E of 23x FY24E."

They further added that “GREENP trades at a P/E of 14.9x FY24E, which is attractive given the strong growth prospects, high return ratios, robust balance sheet and industry leadership position. Maintain BUY with an unchanged Mar’23E target price of Rs662."

They claimed that “GREENP is the demerged entity of Greenply Industries (MTLM IN), carved out primarily to house the latter’s MDF business. The demerger was done in Jul’19 and the stock listed on 23rd Oct’19. GREENP is the largest MDF player in the country with an installed capacity of 660,000cbm, spread across two facilities – in Uttarakhand and Andhra Pradesh. GREENP is a play on the growing shift of India wood panel market towards MDF and is expected to witness revenue/PAT CAGRs of 15.6%/21.3% over FY22-FY24E with robust balance sheet and high return ratios. We like the company for its leadership position in the fastest-growing segment of the wood panel market and maintain BUY with an unchanged Mar’23E target price of Rs662, set at a P/E of 23x FY24E; which is ~30% discount to target PER of Century Plyboard which has a comprehensive wood panel portfolio and ~5% premium to Greenply Industries’ target PER."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.