Archidply Industries IPO Analysis - Take Limited Exposure
Strengths
Enjoys various tax benefits. The Rudrapur unit has received approval for thermal energy generation from renewable biomass, making eligible for 24,659 certified emission reductions (CER) annually.
Weaknesses
Faces intense competition from unbranded products from the unorganized sector of the wood-based industry. There are many strong local brands,too. Moreover some organized players are much larger than Archidply.
Yet to receive license to manufacture MDF at Rudrapur.
Valuation
Archidply has set a price band of Rs 70 to Rs 80 per equity share of Rs 10 face value. At the lower price band, the P/E would be 10.3 times and at the upper price band, the P/E would be 11.8 times the EPS for financial year ended March 2008 (FY 2008) on post-issue equity of Rs 22 crore. In the decorative wood-based/ laminates segment, comparable companies such as Greenply industries, Uniply Industries and Novopan Industries have TTM P/E of around 8, 6.6 and 8.1, respectively. Take limited exposure.
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