Century Plyboards, the country's leading plywood manufacturer, continued to experience weakness in its shares for the third consecutive trading session, marking a new 52-week low of ₹475.2 apiece in Friday's trade.
In the current year so far, the stock has lost nearly 5.70% of its value and in the last one year, it has declined by 29%. The stock's decline started in September of the previous year at a level of about ₹687, and it has continued to follow the same trend until now, resulting in a loss of 31.30%.
Despite the recent fall, the company's shares are up by 320% in the last three years and 794% in the last 10-year period.
The company recently, on March 06, said that it has completed the expansion of its medium-density fiber (MDF) board unit at Hoshiarpur, Punjab, and has successfully started commercial production at the new manufacturing line with effect from March 5, 2023.
For the December-ending quarter of FY23, the company reported weak performance, with its consolidated net profit falling to ₹82 crore from ₹94 crore in Q3 FY22. Century's earnings have declined due to weak demand in the laminates, MDF, and particle board segments, as well as inflated timber prices.
The company reported a 3.40% growth in revenue to ₹884 crore during the quarter, compared to ₹855 crore in the corresponding quarter of the last fiscal.
The operating profit dropped to ₹129 crore, a drop of 14% YoY, while the EBITDA margin fell by 300 bps YoY to 15% in Q3FY23.
Domestic brokerage firms delivered mixed ratings on the stock following the Q3FY23 performance. ICICI Direct Research has downgraded the stock from "buy" to "hold" with a target price of ₹570 apiece. The brokerage cited input price concerns and a possible MDF supply-led pricing pressure as the reasons for the downgrade.
"Imports in the MDF segment have increased in recent times due to a fall in freight costs, which has largely impacted product demand based in southern India. However, the company has not witnessed any meaningful pressure due to a rise in imports in the north region," said ICICI Direct Research.
HDFC Securities, on the other hand, kept its "buy" rating on the stock and a target price of ₹715 per share. "We like Century for its strong franchise (pan-India distribution, aggressive marketing, and a wide range of SKUs), leadership presence in most wood segments, and healthy return ratios," said the brokerage.
Further, Nuvama Wealth also retained its "buy" call on the stock with a target price of ₹663 apiece. The brokerage remains positive on the company’s long-term growth prospects given its diverse product portfolio, broad distribution, and strong brand name.
However, Nuvama trimmed its FY23/FY24 earnings estimate by 14% and 9%, respectively, due to the current weakness in demand. According to the brokerage, the company's operational performance in Q3FY23 was subdued due to a contraction in growth in the MDF segment and lower growth in other key segments.
15 analysts polled by MintGenie on average have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
