Summary of earnings call for Greenply Industries Ltd published on 01 Aug, 2025

Greenply Industries Limited
Q1 FY26
Call date · July 30, 2025

1 · Management Commentary

Key Positives

• Consolidated quarterly revenue of INR601 crores, up 2.9% YoY.
• Core EBITDA at INR62 crores, up 6.4% YoY; margin improved to 10.3% from 9.9%.
• PBT (before certain adjustments) at INR50 crores, up 33% YoY.
• MDF business: Revenue INR147.3 crores, volume 46,350 CBM, realization up 3.1% YoY, EBITDA margin improved to 17.4%.
• Launch of first TV campaign for Ecotec plywood to drive brand preference and penetration in Tier 2/3 markets.
• Reduction in exposure to Greenply Middle East Limited, lowering contingent liability from INR50 crores to INR32 crores.

Key Negatives

• Liquidity challenges led to delayed project commencements and increased net debt (INR538 crores).
• June was notably weak, with subdued demand and delayed payments from channel partners.
• Plywood segment saw a 3.1% YoY volume degrowth; premium product sales were not exciting.
• Furniture and Fittings JV reported a PAT loss of INR10.8 crores (Greenply’s share: INR5.4 crores).

Forward Guidance

• Capex plans: FY26 capex guidance of INR100–140 crores, including Odisha plant, plywood upgradation, and WPC.
• MDF Vadodara plant to expand capacity in August 2025; HDF flooring line to start production in September 2025.
• Focus on value-added products and improving operating efficiencies in MDF.
• Plywood inventory and MDF inventory expected to be liquidated by end of H1 FY26; net debt to return to guided level of 0.5x by year-end.
• Hardware business to remain loss-making in FY26; breakeven expected in 4–6 quarters as dealer base expands and manufacturing phases progress.
• No new business adjacencies planned in near term; focus on current portfolio.
• Double-digit volume growth in MDF targeted; Plywood double-digit growth unlikely for FY26, but margin guidance remains double-digit.
• PVC business targeted to reach INR200–225 crores topline in 3 years.

2 · Q&A Highlights

Q 1 (Composite): What is the rationale for MDF capacity expansion despite current utilization and industry overcapacity?
A (Management):
• Actual utilization is ~90% with current product mix; expansion is a low-capex debottlenecking to increase output by 25%.
• Capex for expansion is INR10–12 crores.

Q 2 (Composite): Outlook on timber prices and impact on margins for Plywood and MDF?
A (Management):
• Plywood timber prices stable; MDF timber prices reduced by 2–3% in Q1.
• Expect stabilization or further softening in H2 FY26.

Q 3 (Composite): Guidance for Plywood and MDF volume/margin growth for FY26?
A (Management):
• Plywood: Double-digit volume growth unlikely; better guidance after Q2. Margins expected to remain double-digit.
• MDF: On track for double-digit volume growth and 16%+ margin for FY26.

Q 4 (Composite): Status and outlook for Furniture & Fittings JV and new hardware/PVC businesses?
A (Management):
• Hardware business: Revenue INR6.5 crores in Q1; loss of INR10.8 crores (Greenply’s share: INR5.4 crores).
• Dealer base >200; breakeven expected in 4–6 quarters as manufacturing phases complete and dealer base expands to 500–600.
• PVC: Already selling INR65 crores annually; in-house manufacturing to support growth to INR200–225 crores in 3 years.

Q 5 (Composite): Impact of BIS/QCO implementation and industry dynamics on pricing and margins?
A (Management):
• BIS implementation seen as positive; government intent is strong, with enforcement ongoing.
• Industry overcapacity to keep MDF margins at 16–17% in near term; 20–21% EBITDA possible in future cycles, but 25% margins seen as historical.

Q 6 (Composite): Details on corporate guarantees, contingent liabilities, and debt increase?
A (Management):
• Gabon (GMEL) guarantee reduced from $6.1mn to $3.8mn; equity stake now 19% (INR2.8 crores carrying value).
• SAMET JV guarantee INR55 crores.
• Singapore entity guarantee $3mn, but no outstanding; to be released.
• Debt increase due to working capital, inventory buildup, and LC payments; expected to normalize by September.

Q 7 (Composite): Plywood inventory and mix of own manufacturing vs. outsourcing; rationale for changes?
A (Management):
• Inventory doubled to INR400 crores due to business model changes and demand-supply factors; expected to reduce in Q2.
• Decline in own manufactured volume due to weak premium product demand; trading/outsourced volumes higher in Q1.

Q 8 (Composite): Channel reach and B2B vs. retail split; plans for further penetration?
A (Management):
• B2B share to increase as hardware and MDF businesses grow; retail still dominant but OEM/Project business rising.
• Channel expansion and cross-selling opportunities expected to drive future growth.

3 · Other Key Numbers

• Consolidated revenue: INR601 crores (Q1 FY26), +2.9% YoY
• Core EBITDA: INR62 crores, +6.4% YoY; margin 10.3% (vs. 9.9% Q1 FY25)
• PBT (before certain adjustments): INR50 crores, +33% YoY (vs. INR38 crores Q1 FY25)
• Plywood segment: Volume degrowth 3.1% YoY; realization INR255/sqm (+4.1% YoY); EBITDA margin 7.9% (vs. 7.8%)
• MDF: Revenue INR147.3 crores; volume 46,350 CBM; realization INR31,763/CBM (+3.1% YoY); EBITDA margin 17.4% (vs. 15% previous quarter)
• Furniture & Fittings JV: Revenue INR6.5 crores; PAT loss INR10.8 crores (Greenply’s share: INR5.4 crores)
• Net debt: INR538 crores (Q1 FY26)
• Contingent liability (GMEL): INR32 crores (reduced from INR50 crores)
• Capex guidance: INR100–140 crores for FY26
• Hardware business: Dealer base >200; expected to cross 500–600 in next year
• PVC business: Current sales ~INR65 crores; target INR200–225 crores in 3 years
• Plywood timber price: ~INR9.5/kg; MDF timber price: ~INR6/kg
• MDF industry growth expectation: 15–20% (management guidance: double-digit for Greenply)
• Inventory: Plywood inventory at INR400 crores (end June 2025)
• Corporate guarantees: SAMET JV INR55 crores; Singapore entity $3mn (no outstanding)

Note: This is an AI generated summary of the earnings call. There may be inaccuracies in the summary. Please refer to the original transcript before making investment decisions.