Century Plyboards (India) Limited — Q3 FY25 earnings call

Call held 11 Feb 2025

Management summary

Century Plyboards delivered Q3 FY25 results largely in line with expectations, showcasing strong revenue growth in plywood and MDF segments. While overall EBITDA margins saw a slight dip due to lower volumes, efficiency gains in MDF and strategic capacity expansions are underway. The company is focused on market share growth and navigating raw material cost pressures, with a positive outlook for market recovery in the coming quarters.

Highlights

  • Standalone revenue increased by 10.3% YoY to INR 1,003 crores in Q3 FY25.

  • Consolidated revenue grew by 20.7% YoY to INR 1,143 crores in Q3 FY25.

  • Overall EBITDA margin stood at 11.5% in Q3 FY25, down from 12.6% in Q2 FY25, primarily due to lower volumes.

  • Plywood segment revenue grew by 19.2% YoY in Q3 FY25, with 9-month FY25 EBITDA margin rising to 14% from 12.1%.

  • Standalone MDF EBITDA improved to 16% in Q3 FY25 from Q2, driven by better production efficiency.

  • Consolidated MDF revenue saw impressive growth of 53% YoY and 7% QoQ, with the new Badvel plant becoming EBITDA positive.

  • The company plans a new plywood plant in Hoshiarpur (INR 150 crores) and is augmenting existing capacities.

  • Particle board segment experienced a 3.1% YoY revenue decline and 4.8% EBITDA margin in Q3 FY25 (assuming Q4 in transcript is a typo for Q3).

Concerns

  • Particle board overcapacity and low margins

Key financials

  1. Standalone Revenue ₹1,003 Cr +10.3%YoY
  2. Consolidated Revenue ₹1,143 Cr +20.7%YoY
  3. Overall EBITDA Margin 11.5% -1.1%QoQ

What they filed

Q1 FY27: revenue up 32.5%, net profit up 38.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,063 1,004 1,049 1,017 1,205 +13%1,147 +14%1,277 +22%1,348 +33%
EBITDA122 104 128 112 139 +14%125 +20%143 +12%172 +54%
Net profit76 64 71 68 73 −4%59 −8%77 +8%94 +38%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentRevenue GrowthEBITDA Margin (Q3 FY25)
Plywood19.2%—
Laminate——
Standalone MDF2.6%16%
Consolidated MDF53%—
Particle Board—4.8%

Capital allocation

medium confidence
  • Capex ₹150 Cr
    • New plywood plant in Hoshiarpur ₹150 Cr
    • Augmenting existing plywood capacity in Kandla
    Yes. So we are planning to put up our plant in Hoshiarpur. We had actually declared this a little while back, but then we had put it on hold because of the raw material fluctuation, and we had also started evaluating another location, which is Odisha Andhra Pradesh border, etcetera. So after all contemplation, we have come to the conclusion that currently, it makes sense to put up a plant in Hoshiarpur. The work has started in the planning stages. We already have the land and some basic work has already been done in the first plan that we've gone ahead about 1.5 years back. So I think it will be a year from now where we will have the plant ready and operational. In the meantime, we are already augmenting capacity in our existing plants like we have a plant in West in Kandla. So we are augmenting capacity there. Some have already happened, some will happen more in the next 3 to 6 months.

Guidance & targets

Volume

  • Plywood Industry Growth Volume · year-on-year · High confidence 5% to 7%
    So see the industry itself, if I really look at Plywood as an industry I think we said it several times that Plywood as an industry will continue to grow at 5% to 7% year-on-year.

    — Nikita Bansal

  • MDF Volume Growth Volume · Q4 · High confidence 50% plus
    So considering that we were able to do it as of the previous quarter, I think we should be able to maintain our guided growth.

    — Keshav Bhajanka

Market Share

  • Plywood Market Share Market Share · next 4 to 5 years · High confidence 15%
    And our goal is ultimately in the next 4 to 5 years to reach 15% market share.

    — Nikita Bansal

Profitability

  • Laminate Plant Breakeven Profitability · by Q2 next year · High confidence Breakeven
    Here next year, by Q2, we should be looking at breaking even only as far as laminate is concerned.

    — Keshav Bhajanka

  • Particle Board Breakeven (EBITDA & PAT) Profitability · FY '27 · High confidence Breakeven
    Understood. Got it. So we expect particle board to breakeven at EBITDA as well as PAT in FY '27? Yes, that's what you would aim for. Both the PAT also breakeven, right? Sorry, can you repeat your question? PAT breakeven will also happen in FY '27? PAT breakeven. Yes, that will be the attempt.

    — Sanjay Agarwal

Capacity

  • Plywood Capacity (Kandla Expansion) Capacity · Medium confidence 15,000 to 20,000 CBM
    And as far as the expansion in our West and some other factories, it's about 15,000 to 20,000 CBM.

    — Nikita Bansal

  • Plywood Capacity (Hoshiarpur New Plant) Capacity · Medium confidence 50,000 per day
    So it would be about per day capacity about 50,000 into 25 working days.

    — Nikita Bansal

  • MDF South Capacity (Post-Extension) Capacity · High confidence 950 to 1,000 CBM per day
    When we take the press extension, the capacity will reach to 950 CBM to about 1,000 CBM as you mentioned.

    — Sanjay Agarwal

Utilization

  • MDF South Peak Utilization Utilization · Medium confidence 75% (ideal) to 85% (realistic)
    So for us, the ideal scenario is utilization peaks at 75%, that means 100% is premium. But I don't see that happening. But still, you're absolutely right. You can take 85% as peak utilization considering the quantum of premium products we are looking to add.

    — Keshav Bhajanka

Tax Rate

  • Blended Tax Rate Tax Rate · Medium confidence ~23%
    Sir, any sense on the blended rate? It could be somewhere around 23%...

    — Arun Julasaria

Revenue

  • Plywood Growth Outlook Revenue · Q4 · High confidence 12%
    Yes. So see, we have given the outlook that in Q4 we will grow at that 12% going forward, and that has been our statement throughout that we will grow at 12%.

    — Nikita Bansal

Margin

  • MDF Segment Margin Margin · March quarter onwards · High confidence Maintain similar
    And sir, going forward, can we maintain similar kind of a margin run rate, say, from the March quarter onwards, what we have delivered in December quarter at least for MDF segment? Yes. Our attempt will be to maintain similar margins.

    — Keshav Bhajanka

Other

  • MDF Export Obligation Timeline Other · High confidence 6 years
    Yes, we do have an export obligation from the MDF unit. And currently, we are not in line to meet the same because the raw material prices have shot up drastically, but we are working on all available options, and we are sure that within the 6-year time horizon, we'll be able to meet our export obligations. And what is the time lines within which we have to export. 6 years. 6 years, sir? Yes.

    — Keshav Bhajanka

What to watch in Q4 FY25

Hoshiarpur Plywood Plant Commissioning Progress

next year
Current Planning stages, land acquired
Target Construction progress, operational timeline confirmation

Why it matters

This new plant represents a significant capacity addition (INR 150 crores) for the plywood segment.

Yes. So we are planning to put up our plant in Hoshiarpur... So I think it will be a year from now where we will have the plant ready and operational.

Risks & concerns

  • Particle board overcapacity and low margins

    high

    Industry is experiencing overcapacity with new players, leading to low margins and pressure on profitability; breakeven targeted by FY27.

    Analyst acknowledged

  • Timber price volatility and impact on margins

    medium

    Timber prices are elevated, but management expects normalization within 1-2 years due to import parity.

    Analyst acknowledged

  • Laminate segment execution challenges

    medium

    Execution on the ground has not been as good as plywood, leading to a change in leadership for the segment.

    Management acknowledged

  • Dynamic market conditions and competition

    medium

    The market is dynamic, and competition's reactions can affect strategies and growth trajectory.

    Management acknowledged

Q&A highlights

7 direct
Outlook on global timber prices and impact on domestic prices Partial
If you look at imports into India in terms of timber imports, they are not very substantial as far as our industry is concerned. Timber has started importing some amount of chips and some amount of pulp, which means that domestic prices are now more or less falling in line with international prices. So the only conclusion we can draw here is that going forward, there will be the possibility to import chips if prices rise further. But having said that, we don't see the scope for prices rising much because of disparity. So again, the same statement I made last time. The hope is that within that time period, prices will start reducing. As of now, it's not happened. But going forward, definitely, the prices today seem to be on a much more elevated level. So I think that within the next year or two, they will normalize.

Analysts sought clarity on timber price trends, a key raw material, and management indicated a potential normalization within 1-2 years due to import parity.

Asked by Shubham Kadhi

Plywood sourcing strategy amidst INR depreciation (import vs domestic) Direct
So there are various raw material options that are available. So we keep deciding basis pricing and what is the processing cost of that in our factories because a lot of the things that we get we save a lot in terms of drying and because they come in the dried state. So I don't think it's a simplistic answer just because USD cost is a concern right now, and we will have to change our decision. Currently, we don't, but we keep evaluating it. It's very dynamic. It also depends on what is the pricing at that moment in the thing. Currently, we are continuing with import. Things may change in a month. But as of now, it is still making sense to continue with import. So currently, I would say that we are 75%, 80% depending on import for plywood raw material and about 20% is domestic.

Analyst questioned the impact of INR depreciation on import strategy; management clarified that imports (75-80%) are still viable due to processing cost savings and dynamic evaluation.

Asked by Bhavin Rupani

Laminate plant utilization and breakeven timeline Direct
So again, when you look at this capacity, the number of sheets comes in the form of quantity, but it can be a sheet of 6 mm or it can be a sheet of 1 mm. Now of course, if it is a sheet of 1 mm, the profitability is going to be far lower. If it is a sheet of 6 mm, the realization profitability, will be far higher. So because of this, I think currently, the numbers that you are seeing, are slightly skewed. They are skewed towards lower-value products. Hence, you're seeing in terms of quantity, a good increase, but in terms of value, a lower increase. So going forward, the capacity utilization is going to be far higher. I think here, rather than looking at it from the point of view of numbers, we should look at it from the point of value. Here next year, by Q2, we should be looking at breaking even only as far as laminate is concerned.

Analyst probed the underperformance of the laminate plant; management explained the skewed product mix towards lower-value products and guided for breakeven by Q2 next fiscal year.

Asked by Bhavin Rupani

MDF South plant utilization and product mix strategy Direct
So Hrishi basically, in any new plant, you will first start selling the mass products and then gradually as you delve deeper into the market, you will start selling the value add. So currently, the majority of our products are in the lower-end DI category, premium plus prelam etcetera, takes some time to ramp up and we are ramping up. But I think next year, towards H2 you will see us reach somewhere close to the same figures that we have in Hoshiarpur in the Badvel unit. Yes. Depending on the product mix, see, for us, the ideal scenario is utilization peaks at 75%, that means 100% is premium. But I don't see that happening. But still, you're absolutely right. You can take 85% as peak utilization considering the quantum of premium products we are looking to add.

Analyst questioned the product mix and utilization of the new MDF plant; management detailed the ramp-up strategy from mass to value-added products and provided peak utilization targets.

Asked by Hrishikesh Bhagat

Plywood segment outperformance, market share gains, and sustainability Direct
So see the industry itself, if I really look at Plywood as an industry I think we said it several times that Plywood as an industry will continue to grow at 5% to 7% year-on-year. It won't grow in double digits just because there are a lot of other wood panel products like MDF particle boards that are coming in. Growth will continue at 5% to 7%. And we have always said that as a company, if I really look at the industry, we used to be a few years back about this basis turnover, we used to be about 4% to 5%. Today, we've reached 9%. So somewhere we are gaining market share. And that has been through our various strategies that we keep doing. And our goal is ultimately in the next 4 to 5 years to reach 15% market share.

Analyst sought reasons for plywood segment's strong growth; management attributed it to market share gains through various strategies and reiterated the 15% market share target.

Asked by Sneha Talreja

Reasons for laminate segment underperformance and corrective actions Direct
I think in laminates, we have not been able to execute. We had good strategies. We've been able to revise a number of new interventions, for instance, increasing team size for architect working, for instance, introducing semi laminates, but the execution on ground hasn't been as good as Plywood. And I think towards that end only, we have now taken the decision to bring about a change in leadership. I'm sure with the change in leadership and with a course correction that we have already taken, we should be able to execute better on the ground and that should result in better numbers going forward.

Analyst questioned the challenges in the laminate segment; management acknowledged execution issues and announced a change in leadership to drive improvement.

Asked by Sneha Talreja

MDF segment margin improvement despite industry contraction Direct
I think it is better efficiencies as far as our new plant is concerned. Last quarter, if you look at it, on a standalone basis, while we weren't very far off from where we are in the current quarter. But on a consol basis, we are very, very far apart. So the new plant, of course, there have been operational efficiencies that we have brought in. Alongside that, I think that in terms of timber, we have benefited slightly from having higher inventory, which has reduced the cost. But overall, I think this is predominantly due to operating leverage and due to operating efficiencies that we are able to generate.

Analyst questioned the counter-trend margin improvement in MDF; management attributed it to better efficiencies at the new plant, operating leverage, and benefits from higher inventory.

Asked by Utkarsh Nopany

Update on BIS implementation for wood panel products Direct
Yes. I think BIS is getting effective in different products at different times. So say, for example, plywood is 28th Feb is the date. I think in MDF it is 11th or 12th Feb is the date. And I think it is very -- I think if you give us a day or so to know whether it really got effective or not. But this time, it seems that the government is extremely serious about this being put into motion. In terms of import, it will be done on these dates. In terms of domestic, I think we are doing it in a staggered manner over big, small and micro up to August.

Analyst sought clarity on the effective dates and implementation of BIS standards, a significant regulatory development for the industry.

Asked by Shivkumar Prajapati

3 min read 6 chapters

Detailed narrative

Q3 FY25 Performance Overview

Century Plyboards reported Q3 FY25 results largely in line with expectations. Standalone revenue increased by 10.3% year-on-year, reaching INR 1,003 crores, while consolidated revenue grew by 20.7% year-on-year to INR 1,143 crores. The overall EBITDA margin for the company stood at 11.5% in Q3, a decline from 12.6% in Q2, primarily attributed to lower volumes during the quarter.

Segmental Performance Highlights

The Plywood segment demonstrated strong performance with a 19.2% year-on-year revenue growth in Q3, and its 9-month FY25 EBITDA margin improved to 14% from 12.1%. The Laminate segment faced revenue declines both year-on-year and quarter-on-quarter, though Q3 EBITDA was maintained at Q2 levels through marketing optimization. Standalone MDF revenue was relatively flat QoQ but grew 2.6% YoY, with EBITDA improving to 16% in Q3 due to better production efficiency. Consolidated MDF revenue grew significantly by 53% YoY and 7% QoQ, with the new Badvel plant now EBITDA positive. The Particle Board segment experienced a 3.1% YoY revenue decline and reported an EBITDA margin of 4.8% in Q3 (assuming typo for Q4), impacted by lower volumes and increased raw material costs.

Capacity Expansion and Utilization

The company is undertaking strategic capacity expansions, including a planned INR 150 crores new plywood plant in Hoshiarpur, which is expected to be operational in about a year. Additionally, existing plywood capacity in Kandla is being augmented by 15,000 to 20,000 CBM, with current utilization at 90-95%. The MDF South plant's current capacity is around 800 CBM per day, with plans to expand to 950-1,000 CBM per day after a press extension. Management targets 75-85% peak utilization for the new MDF plant.

Raw Material and Margin Dynamics

Timber prices, a key raw material, have seen increases, with MDF timber costs rising 5-7% in North and 10-12% in South quarter-on-quarter. Despite this, MDF margins improved due to better production efficiencies at the new plant and benefits from higher inventory. The company has also implemented a 3-4% blended price hike pan-India for MDF in the previous quarter and a 4% price rise for plywood this year. Management expects global timber prices to normalize within 1-2 years, aligning with international prices.

Market Outlook and Strategy

The plywood industry is projected to grow at 5-7% year-on-year, and Century Plyboards aims to achieve a 15% market share in the next 4-5 years, up from the current 9%. Management anticipates market recovery in the coming months, driven by increased government spending and investment cycles. The laminate segment's underperformance is attributed to execution issues, leading to a change in leadership to drive better results. The particle board segment faces overcapacity but is targeted to achieve EBITDA and PAT breakeven by FY27.

Regulatory Updates (BIS)

The Bureau of Indian Standards (BIS) regulations are becoming effective for various wood panel products. For plywood, the effective date is February 28th, and for MDF, it is February 11th or 12th. While import compliance is expected by these dates, domestic implementation will be staggered for different manufacturers (big, small, micro) until August. Management notes the government's seriousness in enforcing these regulations.

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