CLSA has downgraded Century Plyboards rating to ‘sell’ on weaker outlook. The investment firm has reduced rating from the existing ‘buy’ to ‘sell’ at a target price of Rs 174 from Rs 195 earlier.
Keshav Bhajanka, executive director of Century Plyboards, discusses the downgrading as well as the company outlook for FY20.
“We think prices of medium-density fibreboard (MDF) have bottomed out”, said Bhajanka.
He further added that overcapacity in the industry led to price cuts in MDF.
“I do not think anyone has gained by reducing prices and at the same time margin has been falling. So this is probably the bottoming out of the price war. Having said that our capacity utilization is quite good and going forward we should be looking at an upswing in margins as well as reversal in price trend,” he added.
Talking about capacity utilization, Bhajanka said, “Our capacity utilization currently is in excess of 80 percent.”
The industries’ capacity utilization currently stands at around 60%.
Despite CLSA’s negative outlook, Century Plyboards is looking to expand its capacity by 50% and is going ahead with its expansion plans. The company has planned a capital expenditure between Rs 120-125 crore.
Century Plyboards quoted at Rs 188.70 per share correcting by 2.68% on BSE at 1:51 pm.
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