Greenlam Industries shares jump 14% on strong Q2 results; check details

Shares of Greenlam Industries Ltd rose sharply in Monday's trade after the company recorded strong earnings during the second-quarter that ended on September 30, 2023 (Q2 FY24). The stock surged 14.18 per cent to hit a day high of Rs 489.55 over its previous close of Rs 428.75. At today's high price of Rs 489.55, the scrip was down 6.39 per cent from its 52-week high of Rs 522.95, a level seen on August 4 this year. Despite the mentioned fall, it has gained 73.23 per cent from its one-year low price of Rs 282.60, hit on March 29, 2023.

The company said it has reported a net profit of Rs 39.4 crore in Q2 FY24, growth of 34.9 per cent over same quarter of the previous financial year. Greenlam's operating profit grew by 40.8 per cent to Rs 75.6 crore as compared to Rs 53.7 crore in the corresponding quarter last year.

For the second-quarter, consolidated net revenues from operations witnessed a growth of 16.5 per cent, at Rs 603.6 crore, as compared to Rs 518 crore in the corresponding quarter of the previous financial year. The laminate business witnessed a volume growth of 15.7 per cent on YoY (year-on-year) basis, contributed by both domestic and international business.

For the half year (H1) ended on September 30, consolidated net revenues from operations witnessed a growth of 13.2 per cent, at Rs 1,118.9 crore, as compared to Rs 988.6 crore in the corresponding period of the previous financial year.

The laminate business grew 11.3 per cent in value terms and 11 per cent in volume terms on YoY basis. Operating profit increased by 34.5 per cent to Rs 139.9 crore in H1 FY24 as compared to Rs 104 crore in H1 FY23.

The company recorded a 33.2 per cent increase in net profit at Rs 71.6 crore, as compared to Rs 53.8 crore posted in same period of the previous financial year.

Saurabh Mittal, Managing Director and CEO at Greenlam Industries, said, "Gross margins for the quarter improved by 680 basis points (bps), reaching 51.4 per cent. EBITDA margins for the quarter also increased by 210 bps and stood at 12.5 per cent primarily driven by improvements in the laminate business."

He also underscored that there was no production or sales pertaining to the laminate unit at Naidupeta plant in Q2 FY24. "Our greenfield particle board project at Naidupeta, Andhra Pradesh is progressing as per schedule and is expected to commence production in Q4 FY24," he added.

On technical setup, the counter was trading higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-, 200-day simple moving averages (SMAs). The counter's 14-day relative strength index (RSI) came at 73.24. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 40.92 against a price-to-book (P/B) value of 6.37.

The scrip has an analyst target price of Rs 506, Trendlyne data showed, suggesting a potential upside of 7 per cent in a year. It has a one-year beta of 0.54, indicating low volatility on the counter.

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