Reduce Greenlam Industries Ltd For Target Rs. 250 By JM Financial Services
Strong quarter; maintained guidance for FY26
Greenlam Industries (Greenlam) reported strong operating performance in 2QFY26 with consolidated revenue increasing ~19% YoY and 20% QoQ to ~INR 8.1bn (JMFe: INR 7.5bn) owing to strong momentum across all business segments in both domestic and international market. EBITDA rose 30% YoY/ 28% QoQ to ~INR 1bn (JMFe: INR 632mn) with margin increased 95bps YoY/ 637bps QoQ to 12.9%. Adjusted PAT declined ~7% YoY to INR 323mn in 2Q. The company announced capacity expansion of 2mn sheets/boards at its existing laminate plant in Naidupeta, Andhra Pradesh at a capex of INR 700mn; expected to get commissioned by 4QFY27. The management reiterated its revenue growth guidance of ~18-20% for FY26 along with EBITDA margin of ~11-12%. Factoring in 2Q performance along with continued losses in the plywood and chipboard operations, we cut our EPS estimates by ~14-27% for FY26E-28E. In line with our new rating system, we change our rating from HOLD to REDUCE with a revised TP of INR 250/sh based on 27x Dec’27 P/E post quarterly roll-over.
* Result summary: Greenlam’s consolidated revenue grew ~19% YoY and 20% QoQ to ~INR 8.1bn (JMFe: INR 7.5bn) owing to strong momentum across all business segments in both domestic and international market. EBITDA rose 30% YoY/ 28% QoQ to ~INR 1bn. EBITDA margin expanded 95bps YoY/ 637bps QoQ to 12.9%. Adjusted PAT declined ~7% YoY to INR 323mn. Net debt increased INR 32mn YoY/ declined INR 446mn to ~INR 10bn as of Sep’25. In 1H, company has generated FCF of INR 299mn post working capital blockage of INR 26mn and capex spend of INR 602mn. Net working capital days declined 13 days YoY and QoQ to 46 days in 2Q.
* What we liked: Better than estimated profitability, improvement in working capital days, and decline in net debt
* What we did not like: Continued losses in plywood and chipboard operations ? Earnings call KTAs: 1) The management reiterated its revenue growth guidance of ~18-20% for FY26 and aims EBITDA margin of ~11-12% in FY26. 2) Laminates and allied segment: The company maintained EBITDA margin guidance of ~16% over the long term. It highlighted prices in the domestic market have increased, whereas raw materials cost broadly remained stable in 2Q. 3) Plywood and allied: It reported plywood EBITDA loss of INR 580mn in 2Q. 4) Panel and allied: Targets to achieve EBITDA breakeven by FY27. 5) Expansion updates: i) It announced 2mn sheets/boards capacity expansion at its existing laminate plant in Naidupeta, Andhra Pradesh at a capex of INR 700mn; expected to get commissioned by 4QFY27. Taking this, the plant’s capacity will increase from current 24.5mn sheets/boards p.a (CU ~96% in 2Q) to 26.5mn sheets/boards. Company expects revenue contribution of INR 3.75-4bn. ii) Additionally, it has opportunities to increase its capacity by 3 more lines in Andhra Pradesh and another 3-4 lines in Gujarat at a capex of INR 450-500mn per line; civil cost already taken care of. 6) On exports business front, U.S. comprises ~6% of total exports. Considering the tariffs, it does not expect any cost benefits. Currently, 60% is being borne by the company and ~40% being passed to the markets.
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SEBI Registration Number is INM000010361
