Buy Greenpanel Industries Ltd For Target Rs.284 by Prabhudas Liladhar Capital Ltd
Focus on Market Share Recovery
GREENP’s domestic MDF volumes grew by 12% YoY in Q1FY27, while exports remained nil due to the ongoing Middle East crisis. MDF realization increased ~7.4% YoY, supported by the earlier price hike and favourable mix shift towards retail, with OEM sales historically accounting for ~20–25% of the mix. In Q1FY27, timber prices remained broadly stable, while chemical costs remained elevated. To offset higher rawmaterial costs, the company had implemented cumulative price hikes of ~15%, which have largely been absorbed and subsequently rolled back in the market. Management refrained from providing FY27 revenue and margin guidance amid continued geopolitical and raw-material uncertainties, but remains focused on volume growth, market-share gains and improving capacity utilisation. Competitive pressure is expected to persist through FY27, with demand conditions likely to improve from FY28. We cut our earnings estimate by 32.8%/12.6% for FY27/28E and Maintained ‘BUY’ rating revised TP of Rs 284 (Rs 325 earlier), based on 20x Mar’28 earnings. We estimate revenue/EBITDA/PAT CAGR of 20.5%/65.1%/195.5% over FY26-28E with MDF volume CAGR of 14.5%.
Q1FY27 financial performance:
Revenues grew by 6.6% YoY to Rs 3.5bn (in-line with our est). Gross margins expanded by ~490bps YoY to 52.7% (PLe: 39.9%), mainly driven by lower timber costs and price hikes implemented to offset higher chemical costs. EBITDA grew by 299.6% to Rs 302mn (PLe: Rs 367mn), EBITDA margin expanded by 630bps YoY to 8.6% (PLe: 10.4%). PBT stood at Rs 40mn against a loss of Rs 199mn in Q1FY26 (Ple: 108mn). PAT stood at Rs 12mn against a loss of Rs 346mn in Q1FY26 (Ple: 94mn). In Q1FY27, company reported currency loss of Rs 18.7mn on Euro currency borrowings for the new plant. MDF segment reported revenue of Rs3.2bn up by 8.8% YoY. MDF volumes declined by 2.3% YoY to 99,747 CBM (Ple: 10.5%), while realisation increased 7.4% YoY to Rs 31,758/CBM. The exports business was impacted by the ongoing Middle East crisis and reported no volume/sales in Q1FY27. MDF EBITDA stood at Rs 326mn up by 154.7% YoY with a margin of 10.3% (Ple: 11.2%) . EBITDA per CBM stood at Rs 3,271 /CBM in Q1FY27 from Rs 1,255/CBM in Q1FY26. Plywood segment reported revenue of Rs 332mn up 5.5% YoY, with volume growth of 10.4% YoY to 1.3 MSM. Reported realization of Rs255/sqm.
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