CENTURYPLY - Century Plyboards (India) Ltd. Share Price

Management's outlook for Century Plyboards (India) Limited is focused on maintaining a robust growth trajectory across its segments despite current market challenges. For Q1 FY '26, the company recorded a standalone revenue growth of 6.8% and a consolidated revenue growth of 16.3%. The Plywood segment led with a remarkable 15.3% growth in revenue, supported by increased volume, while the EBITDA margin for Plywood was at 13.8%. Overall, consolidated EBITDA (excluding foreign exchange impact) improved from 11.2% to 12.5%.

Management provided guidance that for the current fiscal year, the company expects to achieve a minimum of 10% growth in Plywood sales, although the sentiment indicates they aim to outperform this target based on recent strong performance. The MDF segment saw a significant 23.7% year-over-year revenue increase, with an impressive EBITDA margin of 14.3%. For the Laminates segment, a recovery is anticipated, projecting around 20% revenue growth with an EBITDA margin in the mid-to-high single digits.

Critical forward-looking points include:

1. Sustainability and Growth: The plywood sector benefitting from urbanization, rising disposable incomes, and a shift towards organized products.
2. Capacity Expansion: The commencement of commercial production at a new particle board plant in Tamil Nadu is expected to enhance growth and reduce costs.
3. Improved Metrics: The working capital cycle has decreased from 76 days to 71 days, indicating better management of raw materials.
4. Strategic Cost-Saving Initiatives: To aid margin recovery in Laminates, management plans to implement various cost-saving measures.

Overall, management expressed confidence about long-term prospects, particularly in light of ongoing infrastructure development and a potential recovery in private capital expenditure.

1. Question: "Could you provide some sense on plywood top line growth going forward? Is the guidance of 10% indicative of normalization?"

   Answer: We aim to continue delivering growth above 10%. While we're seeing strong performance now, this guidance does suggest some normalization. We're focusing on maintaining growth despite market dynamics, and our intent is to exceed the 10% target whenever possible.

2. Question: "Can you comment on the supply side of MDF and the outlook on pricing trends?"

   Answer: Currently, domestic supply is seeing some improvement as capacity utilization rises. We're reaching a point where we expect to gain market share while maintaining our guidance of 15% margins in the short term, focusing on market leadership amidst ongoing competition.

3. Question: "What is the combined inventory total as of June end?"

   Answer: We will need to get back to you with the specific figures. Our team is currently compiling the details, but I assure you our raw material and finished goods have improved compared to previous reports.

4. Question: "Can you discuss the timber pricing trends for MDF and plywood?"

   Answer: Timber prices are stabilizing, with some rebound seen. Currently, MDF and particle board face easing prices, while plywood timber prices are stable. We expect that elevated timber prices may persist through the end of this year.

5. Question: "What would be the percentage of advertisement spend for the Plywood division this quarter?"

   Answer: Our advertising spend for the plywood division this quarter was approximately 5.7%, which is higher than our usual allocation of about 4%. This increase was largely due to our investment in the IPL campaign this quarter.

6. Question: "What is your game plan for the Laminates division moving forward?"

   Answer: Our target is to achieve 20% revenue growth, with mid-to-high single-digit EBITDA margins. With new leadership and strategic initiatives, we're optimistic about continuing this upward trajectory in both domestic and export markets.

7. Question: "What is the update on the Hoshiarpur plant for plywood?"

   Answer: We are making progress on the Hoshiarpur plant, and we expect to begin operations by Q2 FY '27. We're on track, and the timeline is consistent with our previous estimates.

8. Question: "What's the status on timber pricing for North and South regions?"

   Answer: In Q1, Northern timber prices were approximately INR6.3 per kg, while Southern rates were about 10% lower. We anticipate a slight increase due to the monsoon impact but expect long-term stabilization.

9. Question: "What proportion of your timber is imported, and how does that affect quality?"

   Answer: Currently, a significant majority of our timber is imported. While domestic prices may decline, we prioritize quality, which is why we will likely continue with imports due to their superior quality compared to available domestic options.

10. Question: "What is the long-term debt repayment strategy looking like for the next two years?"

Answer: We're targeting to reduce long-term debt significantly, potentially close to zero by the end of this period, depending on our cash flow and planning efforts. Our current cash flow generation supports this goal effectively.