GREENLAM - Greenlam Industries Ltd Share Price

Management Outlook & Key Points:

• CAPEX Completion: Major expansions (particle board, plywood, laminate plants) are largely completed, shifting focus to operational execution. Particle board production (started Jan 2025) targets 40-50% utilization in FY26, aiming for breakeven at ~50% utilization.
• Growth Expectations: FY25 revenue growth revised to ~12-13% (vs. initial 18-20%) due to subdued Q3 (6.9% YoY growth). Domestic laminates/veneers faced demand pressure, while exports (+12%) and segments like flooring/doors showed resilience. FY26 growth guidance maintained at 18-20% with volume recovery and new capacities.
• Margins & Costs: Gross margins stable (53-55%); EBITDA pressure due to lower domestic volumes. Laminate margins (~13-14%) expected to recover with volume normalization. Raw material costs stable; pricing discipline maintained.
• Debt & CAPEX: Net debt at Rs.1,012 crore (peak level), expected to reduce from FY26 as CAPEX concludes. FY26 planned CAPEX: ~Rs.100 crore (minor pending projects).
• Segmental Highlights:
  • Plywood: Targeting 2x growth in FY26; expanding in South India/Maharashtra.
  • Doors/Flooring: Strong traction (doors +49.5% YoY in Q3); margins improving.
  • Particle Board: Positive market feedback; replaces imports (~Rs.300-350 crore/year).
• Market Share & Geopolitics: Believed to gain share internationally (Europe focus). Easing freight costs (post Israel-Hamas conflict) may aid working capital.
• Other: 1:1 bonus share announced for 10-year listing anniversary. BIS implementation uncertainty noted.

Question 1:
"I know it's early days, but now the particle board plant we commissioned, how is the initial thing going up and what sort of ramp up you're looking and when you feel this plant will break even and how is the current market scenario?"
Answer: Initial feedback on demand and dealer sign-ups is encouraging. Stabilization of production is ongoing, with 40"“50% utilization expected in FY26 and breakeven anticipated around 50% utilization.

Question 2:
"What about your revenue growth guidance which you have given 18% to 20% for this, will you maintain that? And how you see the laminate margin going forward?"
Answer: FY25 growth guidance is revised to ~12"“13% due to subdued demand. FY26 guidance of 18"“20% remains intact. Laminate margins (EBITDA) are expected to recover to 14"“15% with volume growth, as pricing discipline and stable raw material costs support profitability.

Question 3:
"On the gross margins for the laminate business, what can be the steady gross margin that we can look at?"
Answer: Gross margins for laminates are expected to remain stable in the 53"“55% range, subject to raw material price stability. Sequential improvements in Q3 were partly due to year-end purchase bonuses.

Question 4:
"In terms of the growth guidance that you have maintained of 18% to 20% for next year, any sense on what kind of blended margin should we look at?"
Answer: Particle board may breakeven in FY26, contributing minimally to EBITDA initially. Core businesses (laminate, plywood, flooring) are expected to drive normal EBITDA margins, with gradual improvement in particle board profitability.

Question 5:
"How do you see the ramp up happening in excluding of the Southern region for plywood?"
Answer: Plywood expansion into Maharashtra begins April 2025. Product quality and channel partnerships are strong, with FY25 sales doubling YoY. FY26 targets include doubling FY25 sales again.

Question 6:
"What will be the proportion of particle board in FY26 revenue, and is there visibility on OEM partnerships or import substitution?"
Answer: Particle board revenue is not expected to dominate FY26 growth. Initial market response is positive, with minimal import competition (~Rs.300"“350cr annually). Alignment with Greenlam's laminate products strengthens market potential.

Question 7:
"What is the reason for sharp contraction in laminate margin in Q3?"
Answer: Lower domestic laminate volumes (+4% YoY revenue) and higher operating costs (including one-time overseas depot expenses) pressured margins. Recovery hinges on volume growth and cost normalization.

Question 8:
"What is the budgeted CAPEX for FY25 and FY26?"
Answer: FY25 CAPEX is ~Rs.250cr (includes particle board). FY26 CAPEX will drop to ~Rs.100cr, focused on completing pending civil work. Net debt (Rs.1,012cr) is expected to decline from FY26 onward.

Question 9:
"What is the exposure to UP markets and US tariffs?"
Answer: UP/Kumbh demand has minimal impact, as products cater to premium segments. US tariffs are negligible, with North America contributing 5"“6% of exports.

Question 10:
"What is the outlook for veneer, flooring, and door segments?"
Answer: Veneer margins improved to 2.6% EBITDA in Q3. Flooring turned EBITDA-positive; door losses reduced. FY26 EBITDA for the segment is projected at 4"“5%, aided by volume growth and stable capex.

Question 11:
"What is the annualized depreciation and interest for the particle board plant?"
Answer: Annual depreciation: Rs.30"“35cr; interest: Rs.35"“40cr. Costs may reduce if interest rates decline.

Question 12:
"How are export markets (Europe/US) performing?"
Answer: Europe (including UK) shows growth via market share gains, while the US remains flat. International growth relies on competitive pricing and displacing local players.