Concall AI

Greenlam Industries Limited — Q1 FY26 earnings call

Call held 11 Aug 2025

Management summary

Greenlam Industries reported a mixed Q1 FY26, with strong gross margin expansion and robust domestic revenue growth of 11.4% YoY. However, profitability was impacted by initial operating costs in the new chipboard business and a significant forex loss, leading to a net loss of INR15.7 crores. The company remains bullish on its long-term growth trajectory, driven by recent capacity expansions and a diversified product portfolio, targeting 18-20% revenue growth for FY26.

Highlights

Q1 FY26 revenue grew 11.4% year-on-year, though de-grew 1.2% quarter-on-quarter.
Gross margin improved by 110 basis points year-on-year and 240 basis points quarter-on-quarter, reaching 53.1%.
EBITDA margin stood at 8.1%, a reduction of 250 basis points year-on-year and 190 basis points quarter-on-quarter.
The company reported a net loss of INR15.7 crores for Q1 FY26, primarily due to a notional forex loss of INR18.8 crores on a Euro-denominated loan.
The new chipboard plant achieved 30% capacity utilization in Q1 FY26, generating INR31 crores in revenue with a 45% gross margin.
Plywood and allied segment revenue grew 25% year-on-year to INR88 crores, with 28% capacity utilization.
Debt position at the end of Q1 FY26 was INR1,040 crores, up from INR989 crores in Q4 FY25.

Concerns

Notional forex loss on Euro-denominated loan

Key financials

01 Revenue Growth — +11.4%YoY
02 Gross Margin 53.1% +1.1%YoY
03 EBITDA Margin 8.1% -2.5%YoY
04 PAT ₹-15.7 Cr
05 Net Forex Loss ₹18.8 Cr
06 Debt ₹1,040 Cr

What they filed

Q1 FY27: revenue up 18.2%, net profit up 231.3% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	681	602	682	674	808 +19%	706 +17%	858 +26%	797 +18%
Expenses	599	538	618	630	704	638	749	717
EBITDA	81	64	64	44	104 +28%	68 +6%	108 +69%	80 +82%
Margin	12%	11%	9%	7%	13%	10%	13%	10%
Other income	8	1	0	2	1	-4	2	6
Interest	16	16	20	26	24	23	23	19
Depreciation	27	27	33	35	36	36	35	35
Profit before tax	47	21	11	-14	46 −2%	6 −71%	52 +373%	31 +321%
Tax rate	27%	41%	86%	8%	31%	111%	22%	31%
Net profit	34	13	1	-16	32 −6%	-1 −108%	41 +4000%	21 +231%
EPS	1.36	0.50	0.08	-0.60	1.27	-0.01	1.55	0.84

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

Segment	Revenue Growth	Sales Volume Growth	Revenue	Capacity Utilization
Laminate and Allied Segment	—	5.8%	—	—
Plywood and Allied Segment	—	21%	₹88 Cr	28%
Panel and Allied Segment (Chipboard)	—	—	₹31 Cr	30%

Guidance & targets

Revenue

Revenue Growth Revenue · FY26 · High confidence 18-20%

Yes. So my question was the revenue growth guidance which you have given 18% to 20% for this year that holds? Yes. That's right.

— Saurabh Mittal
Revenue Potential from FY25 Investments Revenue · next three to four years · High confidence INR4,500 crores

So the investments we've made until FY25 can potentially generate INR4,500 crores of revenue in the next three to four years.

— Saurabh Mittal

Profitability

EBITDA Margin (Chipboard at full capacity) Profitability · near full capacity · High confidence 18-22%

So EBITDA margins on a near full capacity assuming normalized RM cost not very low, not very high should be between 18% to 22% kind of a margin.

— Saurabh Mittal
Chipboard Breakeven Profitability · this fiscal · High confidence around 40-50% utilization

It's breaking even at around this level. Of course, everything will depend upon how the raw material prices specifically would behave in terms of that.

— Ashok Sharma
Plywood Breakeven Profitability · this year · High confidence EBITDA break even

if that gets done, we should be EBITDA break even, not net break even.

— Saurabh Mittal

Debt

Debt Reduction Debt · next 2 to 3 years · Medium confidence come down to better level

But we believe going forward it will come down and it will remain around INR1,000 crores or similar to what previous year kind of a level, since this year still the remaining capex of around INR150-odd crores need to be made in this year, but we believe from next year onwards this debt should keep coming down.

— Ashok Sharma

Capacity

Chipboard Capacity Utilization Capacity · this fiscal · High confidence 40-50%

This fiscal? We are expecting around 40% to 50%.

— Ashok Sharma
Laminates Production Line Addition Capacity · FY27 · Medium confidence one production line

our sense right now as we see things, in FY27 we will need to add a production line

— Saurabh Mittal
Full Capacity Utilization (Laminates, Chipboard, Ply) Capacity · next 3 to 4 years · High confidence near full capacities

in the next 3 to 4 years, at that point, the laminates business, the chipboard and ply will be near full capacities.

— Saurabh Mittal

ESG

Waste Generation Reduction ESG · by 2030 · High confidence 20%

we have taken a commitment to reduce the waste generation by 20% and be a zero waste landfill by 2030.

— Samarth Agarwal
Packaging Material Reduction ESG · by 2030 · High confidence 25%

From a packaging perspective, we'll be reducing the packaging material by almost 25% by 2030.

— Samarth Agarwal
Recycled Paper Requirement ESG · by 2027 · High confidence 50%

By 2027, 50% of our recycled, of our paper requirement will be made from a recycled paper.

— Samarth Agarwal
Local Wood Sourcing ESG · by 2030 · High confidence 75%

We'll be sourcing 75% of the wood from local sourcing by 2030.

— Samarth Agarwal
Chipboard Wood Needs from Local Plantation ESG · High confidence 50%

Then we have 50% of our chipboard business wood needs will be met by local plantation level.

— Samarth Agarwal
Net Zero (Scope 1 & 2 Manufacturing) ESG · by 2030 · High confidence net zero

we have taken a commitment to be net zero on scope 1 and scope 2 at manufacturing level by 2030.

— Samarth Agarwal
Water Positive ESG · by 2027 · High confidence water positive

We want to be water positive by 2027.

— Samarth Agarwal
Water Intensity Reduction ESG · High confidence 20%

20% reduction in water intensity, the amount of water that we use per sheet of our production

— Samarth Agarwal
Energy Reduction ESG · High confidence 12%

12% reduction in energy

— Samarth Agarwal
Transport Emission Cut ESG · High confidence 20%

20% cut in transport emission.

— Samarth Agarwal
OHS Safety Ratings ESG · High confidence 4+

our OHS safety ratings to be four, above four by five

— Samarth Agarwal
Reportable Incidents Reduction ESG · High confidence 50%

reduction in reportable incidents by 50%

— Samarth Agarwal
Net Promoter Score ESG · High confidence 8.5+

we are targeting to be eight and a half and above, out of a score of 10.

— Samarth Agarwal
Suppliers Aligned with Code of Conduct ESG · by 2027 · High confidence 90%

we're targeting 90% of suppliers to be aligned by 2027 by our code of conduct.

— Samarth Agarwal
Staff Trained on Compliance and Ethics ESG · annually · High confidence 100%

a 100% staff to be trained annually on compliance and ethics.

— Samarth Agarwal

Government Incentives

Incentive Package Value (Naidupeta) Government Incentives · over 7 to 10 years · Medium confidence INR40 crores

but let's say around INR40 crores or something if everything comes at the right moment kind of things with the government because this has been sanctioned

— Ashok Sharma

Risks & concerns

Notional forex loss on Euro-denominated loan
high

A notional loss of INR18.8 crores on a Euro-denominated loan significantly contributed to the net loss in Q1 FY26.

Management acknowledged
Initial operating costs and capacity ramp-up for chipboard business
medium

Q1 FY26 EBITDA was impacted by initial operating costs in the chipboard segment as capacity ramp-up is still underway.

Management acknowledged
Flat international business performance in Q1 FY26
medium

International business remained flat in Q1, though management expects steady traction ahead.

Management acknowledged
High debt levels in the current fiscal year
medium

Debt is expected to remain similar to last year's levels in FY26 due to remaining capex, with reduction anticipated from next year onwards.

Management acknowledged
Impact of US tariffs on exports
low

The recent 25% US tariff increase is being evaluated, but the US market represents a small portion (4-5%) of overall exports.

Analyst acknowledged

Areas of evasion (1)

Absolute total revenue for Q1 FY26

Q&A highlights

2 direct

Particle board profitability and return profile at optimum utilization Direct

So EBITDA margins on a near full capacity assuming normalized RM cost not very low, not very high should be between 18% to 22% kind of a margin.

Provides insight into the potential profitability of the newly established chipboard segment once it achieves scale and stable operations.

Asked by Keshav Lahoti

Debt-equity ratio comfort level and timeline for normalization Partial

If you see what we said, that debt will remain similar to last year level in this year. And with the equity going up and from the next year, we are expecting the debt to come down. So it should come down to the come down to the better level in next 2 to 3 years.

Addresses investor concerns regarding the company's leverage post-expansion and outlines a timeframe for debt reduction and financial normalization.

Asked by Sharad Chandra

Potential cannibalization of the MDF market by particle board Direct

Us and one of our competitors will end up taking some share of MDF, some share of the local plywood, some share of local chipboard. The prelim chipboard market, the melamine chipboard market, I think will end up taking some share of MDF in the commercial segment.

Clarifies the competitive positioning of the new chipboard product and its expected impact on the broader wood panel market, particularly against MDF.

Asked by Varun

2 min read 6 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

Greenlam Industries reported an 11.4% year-on-year revenue growth in Q1 FY26, though experiencing a 1.2% quarter-on-quarter de-growth. Gross margin significantly improved by 110 basis points YoY and 240 basis points QoQ, reaching 53.1%. However, EBITDA margin declined by 250 basis points YoY and 190 basis points QoQ to 8.1%. The company recorded a net loss of INR15.7 crores, primarily due to INR18.8 crores in notional forex losses and initial operating costs from new projects.

Strategic Transformation and Capacity Expansion

The company has completed significant greenfield and brownfield projects over the last three years, investing approximately INR1,450 crores. This expansion has increased manufacturing plants from two to five and diversified the product offering from three to six segments. Greenlam now operates in laminates, particle board, plywood, veneer, decorative veneer, flooring, and doors, serving 120 countries and 40,000 domestic dealer-distributors.

Performance of New Product Segments: Chipboard and Plywood

The new chipboard plant in Andhra Pradesh, India's largest integrated facility, achieved 30% capacity utilization in Q1 FY26, generating INR31 crores in revenue with a 45% gross margin. Management expects chipboard EBITDA margins to reach 18-22% at near full capacity. The plywood and allied segment reported INR88 crores in revenue, growing 25% YoY, with 28% capacity utilization. The company aims for EBITDA breakeven in plywood this fiscal year.

ESG Commitments and Initiatives

Greenlam has adopted comprehensive ESG goals, targeting a 20% reduction in waste generation and zero waste landfill by 2030. Other commitments include reducing packaging material by 25% by 2030, sourcing 50% of paper from recycled content by 2027, and achieving net-zero Scope 1 and 2 emissions at manufacturing level by 2030. The company also aims to be water positive by 2027 and reduce water intensity by 20%.

Financial Outlook and Debt Management

Management reiterated its revenue growth guidance of 18-20% for FY26, projecting INR4,500 crores in revenue from recent investments over the next 3-4 years. The debt position stood at INR1,040 crores at the end of Q1 FY26. While debt is expected to remain similar this year due to remaining capex, it is projected to reduce to a 'better level' over the next 2-3 years as new capacities achieve full utilization and profitability improves.

Market Dynamics and Competitive Strategy

Greenlam is positioned among the top three laminate players globally and is India's largest exporter for 16 years. The company holds a 17.8% share in the organized domestic laminate market. Management believes the new chipboard product, priced 30-35% lower than melamine MDF, will capture market share in commercial segments due to its quality and integrated offerings, without significant cannibalization of MDF.

This is an AI-generated summary of a publicly available earnings call transcript.

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