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We have upward revised our TP to Rs374 (earlier Rs310), raising the target multiple from 18x to 22x (~18% discount to the avg 1-year forward multiple of 27x over FY20–25). This revision reflects emerging green shoots in the business, as highlighted by the management, including: (a) no near-term capacity additions in the industry, (b) correction in timber prices, and (c) GREENP’s focus on market share gains, operational efficiency, and sustaining higher mix of VAP, which are expected to drive margin improvement.

The management has reiterated its guidance for MDF volume growth of 25% (550k CBM) and overall EBITDA margin of ~12% for FY26. However, we estimate 10% MDF volume growth with an EBITDA margin of 12.1% for FY26. We believe MDF volumes will pick up for GREENP over the coming quarters as the impact of commercial-grade MDF subsides in next 9MFY26 (sharp decline during Jul’24–Mar’25). Additionally, improved utilization at the new plant and market share gains supported by targeted schemes and discounts are likely to aid volume growth. Further, correction in timber prices, reduced fixed costs, and operational efficiencies from better utilization are expected to support margin expansion going forward. We estimate revenue/EBITDA/PAT CAGR of 16.1%/62.8%/70.1% over FY25-27E with MDF volume CAGR of 16.5%. Maintain ‘BUY’ rating.

Revenue declines by 10.1%, adj loss at Rs71mn: Revenue was down 10.1% YoY to Rs3.3bn (PLe: Rs4.2bn). MDF segment declined 10.6% YoY to Rs3.0bn. MDF volume declined by 14.3% YoY to 102kCBM (domestic volume decreased 8.6%, export volume increased 40%). Reported blended realization was Rs28,519/CBM (+2.4% YoY) and domestic realization was Rs29,559/CBM (flat YoY). Plywood segment reported revenue of Rs315mn, down 2.8% YoY. Plywood volume declined by 3.3% YoY and reported realization was Rs267/sqm, up 0.4% YoY. EBITDA declined by 79% YoY to Rs76mn (PLe: Rs378mn). EBITDA margin contracted by ~760bps YoY to 2.3% (PLe: 9.0%). In MDF segment, EBITDA declined by 68.1% due to low capacity utilization of the new MDF plant and reduction in ratio of VAP. Reported PBT loss stood at Rs199mn (PLe: Rs208mn). The company reported adjusted loss of Rs71mn against profit of Rs157mn in Q1FY25 (PLe: +Rs156mn).

Concall highlights: 1) GREENP maintained its MDF volume guidance of reaching 550kCBM in FY26 (currently 439kCBM), driven by 10–12% growth from existing plants and 72kCBM contribution from the new AP facility. Domestic/Exports volumes are expected to grow at 30%/12% YoY, with overall margin of 12%. 2) For FY26, the company expects a margin of 7-8% in plywood segment. 3) Domestic MDF volumes declined in Q1FY26 due to the discontinuation of commercial-grade MDF sales, which are non-compliant with BIS norms. 4) The realization difference between commercial and industrial-grade MDF is 6–8%, while the margin difference is 2.5–3%. 5) The new MDF plant operated at 33% utilization in Q1FY26, with full-year utilization expected at ~35%; the plant is expected to stabilize by Q2FY26, reach breakeven at 40% utilization, and VAP to start contributing from Q3FY26. 6) MDF margins contracted by 770bps YoY to 4.4%, due to lower capacity utilization at the new MDF plant, lower ratio of VAP and higher discounts offered.7) Timber prices in North India are higher than in the South, with blended prices at Rs6/kg. 8) A 7% reduction in timber prices during Q1FY26 led to a 200bps improvement in gross margins. 9) The management indicated that every 10% drop in timber prices results in ~300bps gross margin expansion. 10) The company reported Rs510mn in incentives under the Export Promotion Capital Goods Scheme in Q1FY26. 11) The company offered 5% discount in Q1FY26 and 3% discount in Jul’25 to support volume growth. 12) No significant capacity addition is expected in FY26. 3–4 small players from the unorganized sector may add capacity in FY27, which is not expected to materially impact the industry supplydemand dynamics. 13) MDF imports have massively declined post BIS implementation in Feb’25. In Q1FY25, the imports declined by 90%.

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