Greenply Industries | Results Review | TP Rs 300, BUY | Volume driven in-line performance
India Microfinance | Flash Note | On the brink of a downcycle
Greenply Industries
Volume driven in-line performance
Greenply Industries (GIL) reported in-line Q2FY17 revenue growth of 8.5% YoY to Rs 4.35bn driven by 8.4%/13.8% YoY volume growth in the plywood/ MDF segments. EBITDA margin expanded 72bps YoY to 14.9% and was marginally higher than estimates. Adj. PAT was up 28.3% YoY to Rs 351mn, and was better than estimates led by higher other income. Maintain BUY with a revised Sep'17 TP of Rs 300 (vs. Rs 290 earlier).
India Microfinance
On the brink of a downcycle
A regional newspaper recently unearthed a troubling microfinance debt situation in the Wardha district of Maharashtra (see Loksatta, 20 Oct). The article states that borrowers in ~10 villages in the district have been facing high debt levels and harsh recovery techniques by lenders, forcing many villagers to demand government intervention. We believe this epitomises a widespread problem for MFIs, placing the sector on the brink of a sharp correction that will ratchet up NPAs and credit costs. Maintain SELL on BHAFIN (Mar'17 TP Rs 400).
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