IGI Logo

Volume growth robust; margins to recover in H2

GREENP vol MDF grew by 25.1% YoY to 127KCBM with domestic MDF vol. (excluding commercial grade) increased by 30.5% YoY in Q2FY26 and margins stood at 10.7%, due to Export Promotion Capital Goods (EPCG) scheme incentives of Rs60mn (still around Rs 400mn is yet to accrued) and improvement in new plant utilisation (reached to 40%). GREENP has guided for high-teen digit volume growth in domestic MDF segment with a margin of high single to double digit in FY26. We cut our earnings estimate by 6.0%/3.0% for FY27/28E and Maintained ‘BUY’ rating revised TP of Rs 399 (Rs 410 earlier), based on 22x Sep’27 earnings. The management has indicated timber price to remain stable in H2FY26. We estimate revenue/EBITDA/PAT CAGR of 14.6%/45.0%/49.8% over FY25-28E with MDF volume CAGR of 16.2%.

Q2FY26 financial performance: Revenues grew by 19.0% YoY to Rs4.0bn (PLe: Rs 3.5bn). MDF segment reported revenue of Rs3.5bn up by 19.9% YoY. MDF vol. grew by 25.1% YoY to 127kCBM (domestic volume increased 30.5%, export volume decreased 6.4%) and reported blended realization of Rs 27,927/CBM (-4.1% YoY) and domestic realization was Rs 28,587/CBM (down by 6.0% YoY). Plywood segment reported revenue of Rs 348mn (down 5.6% YoY). Plywood vol. declined by 4.8% YoY and reported realization was Rs249/sqm, flat YoY. EBITDA grew by 27.0% to Rs 326mn (PLe: Rs 262mn). EBITDA margin contracted by ~50bps YoY to 8.2% (PLe: 7.5%). In MDF segment, EBITDA declined by 2.1% YoY to Rs 379mn with a margin of 10.7%, EBITDA per CBM stood at Rs 2,988/CBM in Q2FY26. PBT declined by 61.6% YoY to Rs 35mn (Ple:42mn). Adj PAT declined by 56.1% YoY to Rs 63mn (Ple:32mn). In Q2FY25, company reported currency loss of Rs 124mn on Euro currency borrowings for the new plant.

H1FY26 financial performance: Revenues grew by 3.8% YoY to Rs 7.2bn. MDF segment reported revenue of Rs6.5bn up by 2.9% YoY. MDF vol. grew by 3.8% YoY to 229kCBM (domestic volume increased by 9.8%, export volume decreased by 26.1%) and reported blended realization of Rs 28,191/CBM (flat YoY) and domestic realization was Rs 29,016/CBM (down by 3.2% YoY). Plywood segment reported revenue of Rs 662mn (down 4.3% YoY). Plywood vol. declined by 4.2% YoY and reported realization was Rs257/sqm, flat YoY. EBITDA declined by 35.0% to Rs 402mn. EBITDA margin contracted by ~330bps YoY to 5.5%. PBT loss stood at Rs 163mn. The company reported Adj loss of Rs 8mn in H1FY26 due to currency loss of Rs 399mn on Euro currency borrowings for the new plant.

Concall highlights: 1) Greenpane targets for high teen digit volume growth in MDF segment with a EBITDA margin of high single/low double digit for FY26. 2) Timber prices remained stable QoQ and are expected to stay in the same range, while chemical prices (urea, formaldehyde, methanol, melamine) remain elevated but are likely to moderate after Q3FY26. 3) MDF imports declined to ~1,000 CBM in Q2FY26 vs ~20,000 CBM in Q2FY25. 4) MDF margins contracted by 240bps YoY to 10.7% in Q2FY26, impacted by lower capacity utilization at the new MDF plant, lower VAP mix. 5) The company has strengthened its channel network in Q2FY26 and rewarded its top channel partners in Bali, launch of the MITR 2.0 loyalty app, enhanced branding across 7,000+ outlets, and product launches such as HDWR Door, Thin MDF, and FRMDF, along with targeted activation drives across 30+ cities. 6) The company plans to incur Rs300-400mn in maintenance capex for FY26, with steady-state capex expected to remain in the Rs200–300mn. 7) The EPCG benefit stood at Rs 60mn in Q2FY26 (vs. Rs51mn in Q1FY26), with around Rs400mn yet to be accrued. 8) The BIS QCO for furniture manufacturing is expected to be implemented from Feb’26.

Please refer disclaimer at https://www.plindia.com/disclaimer/

SEBI Registration No. INH000000271