GREENPLY - Greenply Industries Ltd Share Price

Greenply Industries Limited's management provided an optimistic outlook during the Q2 and H1 FY '26 earnings conference call. They reported a consolidated quarterly revenue of INR 688.6 crores, reflecting a Y-o-Y growth of 7.5%. For the half-year, total revenue reached INR 1,289.4 crores, exhibiting a 5.3% increase compared to the previous year. The core EBITDA margin for the quarter was 8.2%, down from 9% YoY, leading to a half-year EBITDA of INR 118.4 crores, up 2.5% on a Y-o-Y basis.

Looking ahead, the management emphasized the continued positive momentum across segments, buoyed by BIS implementation and steady timber prices. They projected higher double-digit growth and a recovery in margins for the MDF segment, aiming for 16% margins in H2 FY '26. They also expressed confidence in achieving over 10% volume growth in plywood for the second half, subject to stronger demand driven by improvements in operational efficiency.

Notably, management outlined a refined marketing strategy, focusing on the premium green range and extending communications to the value segment with Ecotec products. They expect to achieve a consolidated net debt reduction from INR 510 crores through inventory liquidation.

Management underscored a cautious yet optimistic view on the MDF industry outlook, anticipating a reduction in imports from unorganized sectors and stronger brand positioning for Greenply. For the entire fiscal year, they provided long-term margins of 14.5%-15% for MDF and around 8.5%-8.6% for plywood. They plan for a capex of approximately INR 100 crores for key initiatives, including expansion, branding, and efficiency improvements, promising a robust rebound in both volume and margin performance in the upcoming quarters.

Major Questions and Answers from Greenply Q&A Earnings Transcript

Question 1: "After the implementation of BIS norms for the industry, have you seen any noticeable shift in demand from unorganized players to organized players, and could you highlight the benefits of BIS implementation for Greenply?"

Answer: We are seeing early signs of improvement post-BIS implementation, particularly a significant reduction in imports, which now account for only 3-4% of last year's figures. This indicates that the demand is shifting to organized players, and we remain optimistic that compliance will bolster our position in the market over time.

Question 2: "What is your demand and supply outlook for the MDF and plywood industry over the next 12 to 24 months?"

Answer: We expect strong demand in MDF and plywood, projecting a 10% volume growth in H2 FY '26 for plywood. Despite current challenges in the real estate sector and a slight decline in quarterly growth, we're investing in improving processes, which will foster greater market traction and confidence in our capacity to meet demand.

Question 3: "Can you clarify your expectations for MDF margins in H2 FY '26 under current conditions?"

Answer: We are committed to achieving 16% margins in H2 FY '26, despite facing competitive pressures. Although the plant shutdown in Q2 impacted margins, our operational efficiencies and increased capacity should support margin recovery and growth as we focus on value-added products.

Question 4: "Are you expecting any price hikes in the MDF market?"

Answer: We are not factoring in any price increases at this time. Our current outlook is based on stable raw material prices and operating efficiencies rather than on anticipated price hikes in the market.

Question 5: "What are your revenue and PAT targets for your furniture and fittings JV in H2 FY '26 and FY '27?"

Answer: We aim for a revenue run rate of INR 25-30 crores in H2 FY '26, targeting INR 100 crores in the next year. We are steadily increasing our dealer network and sales capacity in line with our growth strategy.

Question 6: "What is your capex guidance for FY '26 and FY '27?"

Answer: For FY '26, we expect a total capex of around INR 155-160 crores, including investments in our existing plants and the new Odisha plant. For FY '27, specifics will be discussed later as we finalize our spending pace in the current year.

Question 7: "Could you clarify your guidance for margins and growth projections for both plywood and MDF for FY '26?"

Answer: We expect around 10% volume growth for plywood in H2, with margins potentially reaching 10% if growth exceeds expectations. For MDF, we're targeting 16% margins, and a higher double-digit growth for the same period based on increased capacity and operational improvements.

The responses encapsulate key operational insights and future strategies, reflecting Greenply's confidence in navigating the upcoming fiscal periods.