Greenlam Industries stock spikes nearly 30% in four sessions; should you pick the shares now?

Greenlam Industries, one of the world's top three laminate manufacturers, has seen its stock surge by nearly 30% in the past four trading sessions, climbing from ₹411 apiece to ₹534.50 apiece. In the previous trading session, the stock hit an all-time high of ₹572.45. This sharp uptick in shares was attributed to the company's robust performance in Q2FY24.

In Q2FY24, the company reported consolidated net revenue from operations of ₹603.6 crore, marking 16.5% YOY growth. The laminate segment's revenue grew by 12.70% YoY, reaching ₹531.2 crore.

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The laminate business witnessed volume growth of 15.7% on a YoY basis, contributed by both domestic and international business. Its operating profit jumped to ₹53.7 crore, a 40.8% surge as compared to the corresponding quarter last year, while the EBITDA margin improved by 210 basis points, reaching 12.5%, primarily driven by improvements in the laminate business.

The company reported a net profit of ₹39.4 crore for Q2FY24, a growth of 34.9% over the same quarter of the previous financial year. During the quarter, the company said, it commenced commercial production at the greenfield laminate project at Naidupeta, Andhra Pradesh.

Following the company's healthy earnings, domestic brokerage firm Sharekhan retained its 'buy' call on the stock with a target price of ₹640 apiece.

"Greenlam is on a strong growth trajectory, led by healthy demand for laminates and a softening of input costs. Export markets are expected to improve gradually. The capacity additions in laminates and contributions from the plywood and particle boards divisions are expected to drive growth over the next three years. Strong cash flow generation and tight working capital," said the brokerage. 

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On the other hand, Nuvama Institutional Equites maintained a 'hold' rating on the stock with a target price of ₹545 apiece, citing the uncertainty around the company's new particleboard plant.

On the technical front, Rajesh Bhosale, equity technical and derivative analyst at Angel One, said," The stock price has shown remarkable strength in the last few sessions, rallying from the levels of 400 to the current levels around 525."

"With these prices having broken beyond the previous swing high in July around 520, we are seeing a saucer formation pattern breakout. In the near term, with this breakout supported by good volumes and positive placement of indicators, one can expect an uptrend to continue towards 580 in the near term. 500 is likely to act as support," he added. 

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.