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Healthy performance continues across segments

CPBI has guided revenue growth of 13%+/15-17%/25%/40% in FY26 across its Plywood/Laminate/MDF/PB segments with expected EBITDA margin of 12- 14%/8-10%/15%/low single digit for Plywood/Laminate/MDF/PB. We believe Plywood performance will continue with healthy volume growth. The Particle Board segment’s Q2FY26 performance was impacted as Rs 230mn of sales from trial-run production were capitalized in line with applicable accounting norms and, hence, not reported as revenue. We expect overall revenue/EBITDA/PAT CAGR of 14.3%/22.7%/40.4% with Plywood/Laminate/MDF volume CAGR of 13.0%/11.3%/18.1%. We upward revise Century Plyboards (CPBI) FY27E/FY28E earnings by 3.3%/3.3% due to healthy performance across segments in Q2FY26 and maintain ‘HOLD’ rating with TP of Rs 845 (Earlier 818), valuing at 40x Sep’27E.

Q2FY26 financial performance: Rev. up 17.1% YoY to Rs 13.9bn (PLe: Rs 13.0bn). Plywood/Laminate/MDF/Particle boards (contributed 55.1%/13.6%/24.8%2.4%) revenue at Rs 7.6bn/1.9bn/3.4bn/0.3bn (+14.8%/16.6%/+27.9%/-17.8% YoY), was above our est. of Rs 7.2bn/1.8bn/3.1bn/0.5bn respectively. GM expanded by ~320bps YoY to 48.2%, (PLe:48.3%). EBITDA stood at Rs1.7bn up 56.9% YoY (PLe: Rs1.6bn). EBITDA margin expanded by 320bps YoY to 12.6% (in-line with our est). EBITDA margin of Plywood/Laminate/MDF/Particle board was 14.6%/9.7%/13.7%/- 3.9 (~-75bps/+500bps/+818bps/-1110bps YoY). PBT grew by 68.6% YoY to 1.0bn, (PLe: Rs 1.0bn). Adj. PAT stood at Rs 709mn up 77.4% YoY, (PLe: Rs 762mn).

Q2FY26 financial performance: Rev. up 17.1% YoY to Rs 13.9bn (PLe: Rs 13.0bn). Plywood/Laminate/MDF/Particle boards (contributed 55.1%/13.6%/24.8%2.4%) revenue at Rs 7.6bn/1.9bn/3.4bn/0.3bn (+14.8%/16.6%/+27.9%/-17.8% YoY), was above our est. of Rs 7.2bn/1.8bn/3.1bn/0.5bn respectively. GM expanded by ~320bps YoY to 48.2%, (PLe:48.3%). EBITDA stood at Rs1.7bn up 56.9% YoY (PLe: Rs1.6bn). EBITDA margin expanded by 320bps YoY to 12.6% (in-line with our est). EBITDA margin of Plywood/Laminate/MDF/Particle board was 14.6%/9.7%/13.7%/- 3.9 (~-75bps/+500bps/+818bps/-1110bps YoY). PBT grew by 68.6% YoY to 1.0bn, (PLe: Rs 1.0bn). Adj. PAT stood at Rs 709mn up 77.4% YoY, (PLe: Rs 762mn).

Concall highlights:

1) Mgmt has revised its sales growth guidance upward to 13%+/25% from 10%/20% for Plywood /MDF, however maintained its EBITDA margin guidance to 12-14%/15% However, it has lowered its Laminate segment growth guidance to 15–17% from 20% and maintained the guidance for the Particleboard segment for FY26. 2) MDF segment is operating at healthy utilization levels of around 80–85% across both plants. The 25% capacity expansion plan at the South plant, earlier scheduled for H2FY26, will now likely be commissioned in H1FY27. 3) Laminate revenue growth was driven by improved realizations, supported by a broad-based recovery across both domestic and international markets. The improvement stems from a strategic push toward premium products, rather than gains from any specific geography. 4) Particle Board revenue was declined in Q2FY26 due to capitalization of Rs 230mn trial sales. Adjusted for this, the segment showed growth, and the company remains confident of achieving 40% revenue growth. The new plant began commercial production, with EBITDA under pressure during the ramp-up phase. 5) Wood Prices in the North increased due to supply constraints from heavy rains and floods in Punjab, while the South remained stable to slightly softer. The company expects this to be temporary, with signs of stabilization already visible. 6) Chemical cost pressures persisted due to global commodity trends but are expected to ease within a month as conditions normalize. 7) Working capital efficiency improved, with the cycle reducing from 74 days to 70 days, driven by tighter inventory control, better payable management, and disciplined cash flow practices across divisions.

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