GREENPLY - Greenply Industries Ltd Share Price

Management provided an optimistic outlook for Greenply Industries, projecting a double-digit revenue growth for FY '26, aimed at 10%+ EBITDA margin in the plywood segment and 16%+ in the MDF business.

Key financial highlights included:

• Q4 FY '25 consolidated revenue reached INR 649 crores, an 8.2% increase YoY.
• Full-year revenue at INR 2,488 crores grew by 14.1% YoY.
• Core EBITDA for Q4 was INR 68 crores, rising 18.1% YoY, while full-year core EBITDA was INR 238 crores, up 27.2% YoY.
• The profit after tax for FY '25 stood at INR 92 crores despite losses from equity accounted investees.

Forward-looking points outlined by management include:

1. In FY '26, management anticipates achieving a consolidated revenue growth of over 10%, split evenly between the plywood and MDF segments.
2. The MDF segment expects an increase in production capacity by 25%, with potential revenue generation of around INR 1,000 crores post-expansion.
3. Although timber prices in Q4 FY '25 increased briefly, management suggests stabilization should occur by Q3 when new crop supplies hit the market.
4. The company has plans to reduce its net debt from INR 464 crores, targeting a decrease of approximately INR 100-150 crores over the next two years.

Management is confident that operational efficiencies and product mix improvements will drive growth, with a focus on maintaining margins despite competitive pricing pressures.

1. Question: "In the MDF, you reached a utilization of around 70% plus... What kind of a utilization are you expecting?"

   Answer: We expect to improve utilization levels through a combination of better operational efficiency and an enhanced product mix. Currently, we are at about 74% utilization, which could annualize to around INR 800 crores in revenue. With the planned capacity addition, this could increase to between INR 950 crores and INR 1,000 crores.

2. Question: "What about timber pricing for plywood and MDF?"

   Answer: Timber prices in Q4 rose slightly; plywood increased by 60 to 70 basis points from Q3. Currently, however, it has reverted to previous levels. In MDF, prices peaked at around INR 6.30 but are now below INR 6. Upcoming crop cycles should stabilize or reduce prices by Q3.

3. Question: "Why did the inventory levels increase to 79 days for plywood?"

   Answer: We built up inventory to anticipate market changes post-QCO implementation. This excess is projected to liquidate over the next six months, returning to normal levels. By year-end, we aim to have significantly lower inventory levels due to this strategic buildup.

4. Question: "Can you give some flavor on the South prices for timber for plywood and MDF?"

   Answer: Our purchases for plywood aren't significantly from the South. For MDF, we largely source from Western India. Prices can vary regionally, and while they may trend in a similar way to Yamuna Nagar, there may be different market dynamics at play.

5. Question: "Can you detail further on the MDF Board margin improvements with recent price cuts in the market?"

   Answer: We anticipate improving margins due to operational efficiencies and a more favorable product mix. Despite recent market price cuts, we are focusing on higher-value products that should support margins around our guidance of 16%.

6. Question: "What's the growth guidance for the MDF segment?"

   Answer: For FY '26, we expect double-digit volume growth in both MDF and plywood. A key factor will be successfully completing our capacity extension to maximize our growth potential.

7. Question: "What is the debt repayment plan considering your cash flow projections?"

   Answer: We anticipate reducing debt by about INR 250 crores over the next two years. Our repayment plan sees annual repayments of around INR 50-55 crores, contributed to by improved cash flows from operations.

8. Question: "What is the expected EBITDA margin improvement for MDF in FY '26?"

   Answer: We project EBITDA margins for MDF to improve to around 16%. This is due to continued operational efficiencies, the benefits of higher capacity utilization, and an improved product mix that supports better gross margins.

9. Question: "Any updates on the losses expected from the Greenply Samet JV?"

   Answer: Currently, we're aiming for cash breakeven this fiscal rather than PBT breakeven. Future profitability in Samet will depend on sales mix and volume growth. We project initial losses will be manageable as we ramp up operations.

10. Question: "What are the market dynamics and expectations regarding MDF imports?"

Answer: Imports have significantly reduced and we anticipate that this trend will continue to strengthen our market position. Demand for domestic products will see a boost due to lowered imports and the stringent QCO enforcement.