Century Ply lines up Rs 900 crore capex for capacity expansion

Century Plyboards has lined up investments of over Rs 900 crore over the coming two fiscal years to increase its manufacturing capacity for MDF (Medium Density Fibreboard) and laminates as its plants run close to full capacity.

The company will be investing Rs 543 crore by the end of FY24 towards a greenfield MDF plant in Andhra Pradesh. The company has already invested Rs 57 crore in this plant, bringing the total investment to Rs 600 crore.

The Andhra Pradesh plant will also have greenfield capacity for making laminates, which will entail an investment of Rs 200 crore. Of this, Rs 125 crore will be spent by the end of FY24. The investment in Andhra Pradesh will be made through Century Panels, a 100% subsidiary of the company.

About Rs 51 crore also have been earmarked for a greenfield plywood plant in Punjab in FY24.

Meanwhile, the company is also investing in brownfield expansion of MDF manufacturing capacity at Hoshiarpur, at an investment of almost Rs 75 crore in the ongoing fiscal year. A smaller amount has been earmarked for debottlenecking manufacturing capacity at other existing sites.

“There is tremendous growth potential in all the business segments,” said Keshav Bhajanka, executive director, Century Ply.

Century Ply sells plywood, laminates, MDF and fibre cement and particle boards. Over half of its revenues come from plywood, followed by laminates and MDF.

The company reported a 94% growth in its consolidated revenue for the April-June quarter to Rs 889 crore. Consolidated profit tripled to Rs 93 crore. While margins came under pressure due to volatile commodity prices, the company maintained its EBITDA margin guidance of 13-15% for FY23.

The stock of Century Plyboards India Ltd closed 0.55% lower on the BSE on Friday at Rs 588.3. Benchmark Sensex gained 1.25% during the session.

“We maintain ‘buy’ as it continues to report industry leading growth, stable margins and net cash (positive) balance sheet with internal accruals fuelling the expansion,” analysts at ICICI Direct Research said in a recent research report.

Analysts at IDBI Capital said that with the company’s leadership in plywood segment, the expansion of its business across verticals and its focus on promotional campaigns, the company was a strong proxy to real estate sector cycle.