Accumulate Century Plyboards shares, says Elara Securities

Elara Securities has revised its outlook on Century Plyboards, noting a positive growth trajectory in the particle board segment and laminates. The brokerage has set a target price of Rs 880, reflecting strategic initiatives and expected improvements in operational efficiency.

The sales growth outlook for Century Plyboards is likely to improve in the near to medium term, particularly in the laminates and particle board segments, driven by strategic  initiatives and new plant commissioning, Elara said.

"MDF realisation may improve once the demand-supply gap narrows. In plywood, increased focus on influencers and an expanded on-the-ground sales fleet are aiding in market share gains," it said.

Following an 11 per cent rise on the counter in the past one year, Elara Securities revised its rating on Century Plyboards from 'Buy' to 'Accumulate', reflecting the tough demand environment and revised earnings estimates. The new target price of Rs 880 takes into account a 40 times FY27E P/E, adjusted for current revenue and margin expectations.

Century Plyboards is targeting a 40 per cent growth in the particle board segment for FY26, driven by the new Chennai plant, which is equipped with advanced technology aimed at enhancing cost efficiency. This new facility is expected to play a crucial role in the company's expansion strategy, boosting production and reducing overhead costs.

For the plywood segment, Century Plyboards forecasts more than a 10 per cent increase in FY26, facilitated by the addition of 50,000 CBM capacity to the existing 340,000 CBM. This expansion is expected to capitalize on the stable timber prices and market share gains, even as the overall demand for building materials remains soft.

The company reported a decline in EBITDA margin by 275 basis points year-on-year to 11.2 per cent in Q4, largely due to lower utilisation of the Andhra Pradesh plant and increased marketing expenditure in the laminates segment. However, management has set a consolidated 15 per cent margin target for MDF in FY26, alongside a steady-state margin for particle board as the Andhra Pradesh plant ramps up.

In the laminates division, Century Plyboards anticipates a 20 per cent growth in FY26, supported by robust export orders and strategic marketing initiatives. This growth is expected to be bolstered by a refreshed market approach and significant investments in marketing activities.

The MDF segment is also projected to grow by 20 per cent on a consolidated basis. The increase is attributed to the operational ramp-up of the new Andhra Pradesh plant, which achieved 60 per cent capacity utilisation in Q4. The management is optimistic about further enhancements as the plant continues to scale operations.

Century Plyboards' Q4 results showed a 13 per cent year-on-year increase in net sales to Rs 11.9 billion, driven by an 8.2 per cent growth in plywood and a 35.6 per cent rise in MDF. Despite challenges in the broader market, the company has gained market share due to strategic focus and increased on-the-ground sales efforts.