GREENPANEL - Greenpanel Industries Limited Share Price

In the earnings call for Q1 FY '26, management provided key insights and outlook for Greenpanel Industries Limited. Domestic MDF volumes grew by approximately 2% compared to Q4 FY '25, but there was a year-on-year decline of about 8.5%, mainly due to the discontinuation of 37,000 cubic meters of commercial-grade MDF sales after the implementation of BIS norms. Excluding this impact, domestic sales increased by 47% on a like-for-like basis. The company reported consolidated revenues of Rs. 323 crore for the quarter, with a gross margin of 47%.

Management highlighted several forward-looking factors that could positively influence growth:

1. Expected continued reduction in timber prices.
2. Anticipated halt in significant capacity additions within the sector.
3. A substantial decrease in MDF imports, projected at a run rate of 1,000-1,500 cubic meters per month, down from historical highs of 15,000-20,000 cubic meters.
4. Stricter enforcement of BIS norms, which may restrict unqualified domestic players.

Management plans to focus on regaining lost market share and volume over the next nine months, maintaining volume guidance of 550,000 cubic meters. They emphasized a dual strategy of cost optimization and responsive pricing to address competitive pressures. They also have plans in place for promotional schemes, noting a 3% average discount scheme introduced in July.

Despite a challenging Q1, management remains optimistic, forecasting operational improvements from the stabilization of their new thin panel plant and expecting EBITDA margins to recover in subsequent quarters. The financial goals for FY '26 include aiming for volume growth while supporting their strong balance sheet with ongoing cash generation.

Here's a detailed overview of the key questions and answers from the Q&A section of Greenpanel Industries Limited's Q1 FY '26 earnings transcript:

Question: Will there be any curtailment and guidance on the volume and margin side, as Q1 fell short of expectations?
Answer: We're maintaining our guidance on volume and margins. While there is pricing pressure, we will counter this through cost savings and leverage opportunities.

Question: What sort of pricing schemes have you implemented recently?
Answer: We initiated schemes in July with average discounts of about 3%. These vary by product and market, tailoring our approach based on competition and geography.

Question: How have you managed the transition from commercial grade MDF to industrial?
Answer: We've successfully converted much of the volume from commercial to industrial grades, which represent a more stable market segment for us.

Question: What is the average price difference between BIS-compliant and non-compliant MDF?
Answer: The price difference between industrial and former commercial grades was typically around 6% to 8%.

Question: How is the operational capacity ramping up at the new thin MDF plant?
Answer: We expect to operate the plant at approximately 30%-35% utilization this year and aim for stabilization by the end of Q2, subsequently boosting production.

Question: What is the expected breakeven capacity for the thin MDF line?
Answer: The breakeven for the thin MDF plant is projected at around 40% capacity utilization, but typically, breakeven is between 55%-60% for MDF.

Question: Are you implementing any cost-saving measures to combat the forecasted pricing pressures?
Answer: Yes, we anticipate a 2-3% improvement in gross margins due to lower timber prices and efficiency gains as we stabilize operations.

Question: What was the impact of forex losses on the quarterly results?
Answer: We incurred a forex loss of Rs. 27.6 crores primarily due to adverse currency movements, which was partly unrealized.

Question: What are your expectations regarding capacity addition in the MDF segment?
Answer: We do not expect significant capacity additions in the organized sector for FY '26 and '27.

Question: How do you perceive future market dynamics considering BIS regulations?
Answer: The implementation of BIS regulations is expected to eliminate non-compliant competition, allowing us to capture more market share in the industrial segment.

For each answer, I maintained character limits and included key figures and forward guidance as requested.