Century Plyboards (India) Limited

“Century Plyboards was once a high-quality plywood compounder earning 30% ROCE with a strong brand moat. Aggressive debt-funded MDF expansion has halved returns to 11%, surged debt 5x to 1,765 Cr, and generated negative free cash flow for three years — yet the stock trades at 66x trailing earnings, pricing in a margin recovery that remains unproven in a commoditized, overcapacity-prone market. The risk-reward is deeply unfavorable: downside from valuation compression is substantial, while upside requires flawless execution the company has not yet demonstrated in MDF. Capital is better deployed elsewhere.”