Detailed Narrative
Strong Q2 FY26 Performance Driven by Revenue and Margin Expansion
Greenlam Industries reported a robust Q2 FY26, with consolidated net revenue growing 18.7% year-on-year and 20% sequentially to Rs. 808 crores. The company achieved a gross margin of 54.6%, marking a 300 basis points expansion YoY. EBITDA before FOREX fluctuation crossed Rs. 100 crores, reaching Rs. 107 crores, a 32% increase YoY, with the margin at 13.2%. Net profit for the quarter stood at Rs. 31.8 crores, a slight decline from Rs. 34.4 crores in Q2 last year, attributed to higher depreciation, interest, and FOREX losses.
Laminates Segment Leads Growth and Profitability
The core Laminates and Allied segment continued its strong performance, with revenue growing 10.2% YoY and 18.6% QoQ to Rs. 658 crores. Volumes increased by 7.4% YoY and 17.2% QoQ, supported by a high utilization level of 96%. The segment's EBITDA margin (after FOREX fluctuation) was 18.7%, demonstrating a significant improvement of 400 basis points YoY and 450 basis points QoQ. Management reiterated a long-term margin guidance of around 16% for the Laminates business.
Strategic Brownfield Expansion for Laminates Capacity
Greenlam announced a brownfield expansion project involving two new lines for Laminates at its Andhra Pradesh facility, adding 2 million sheets and boards to its capacity. This expansion is projected to generate an additional Rs. 375-400 crores in revenue annually, with commercial production expected to commence in Q4 FY27. The estimated capital expenditure for a new laminate line is approximately Rs. 45-50 crores, benefiting from existing infrastructure.
New Segments Progress Towards EBITDA Break-even
The Plywood and Allied segment reported a 22.2% YoY revenue growth, reaching Rs. 102 crores in Q2 FY26, with its EBITDA loss reducing to Rs. 3.9 crores. Management anticipates the Plywood business to achieve EBITDA break-even by the end of FY26. The Panel and Allied (Chipboard) segment also showed strong sequential growth, with revenue up 54.2% QoQ to Rs. 47.8 crores, operating at 36% utilization, and is targeted to reach EBITDA break-even by FY27.
Improved Working Capital and Debt Reduction
The company demonstrated efficient working capital management, with working capital days improving by 12 days to 47 days in Q2 FY26 compared to 59 days in Q2 last year. This operational efficiency contributed to a reduction in net debt by Rs. 45 crores during the quarter, bringing the total net debt to Rs. 995 crores as of September 30, 2025. Management highlighted healthy cash flow from operations.
Navigating US Tariffs and Market Challenges
Management addressed the impact of US tariffs on its export business, noting that the US market accounts for 4-6% of its exports. The company is passing on about 40% of the increased tariff costs to customers while absorbing the remaining 60%, which affects its cost competitiveness. Despite ongoing challenges in both domestic and international markets, Greenlam expressed confidence in its teams to continue gaining market share and growing profitably.