Greenpanel Inds.

Greenpanel Industries reported consolidated revenues of Rs. 323 crore for Q1 FY26. The company experienced a negative reported EBITDA of Rs. 12.4 crores, PBT of negative Rs. 47.4 crores, and PAT of negative Rs. 34.6 crores. This performance was significantly impacted by the discontinuation of 37,000 cubic meters of commercial-grade MDF sales, initial stabilization costs of the new thin panel plant, and an adverse currency movement leading to an unrealized FOREX loss of Rs. 27.6 crores.

Domestic MDF volumes degrew by ~8.5% year-on-year, primarily due to the discontinuation of commercial-grade MDF sales post-BIS QCOs. However, excluding this, domestic sales grew by 47% on a like-for-like basis. The company is now aggressively focusing on market share expansion and aims to recoup lost volumes and regain market share over the next 9 months, maintaining its FY26 volume guidance of 5,50,000 CBM. This strategy will involve leveraging cost savings and operating leverage rather than chasing margins in the short term.

Consolidated gross margins for Q1 FY26 stood at 47%, showing a sequential improvement of ~2.5% due to a 7% sequential reduction in timber prices. Operating EBITDA (excluding currency impact) was Rs. 13 crores or 4% of revenues, with MDF at 4.4% and plywood at 0.6%. Management expects further gross margin improvement of 2-3% from continued timber cost savings and aims to counter pricing pressure through variable and fixed cost optimizations.

The new thin panel plant at Andhra Pradesh experienced initial hiccups and cost inefficiencies during its stabilization phase in Q1, impacting overall margins by approximately 3%. The plant was operating at 33% capacity utilization in Q1, with a target to run at 30-35% for the full year. Management expects these inefficiencies to normalize from Q2 onwards, with the plant reaching breakeven at 40% capacity utilization and starting value-added product production from Q3 FY26.

The implementation of BIS QCOs has led to a significant slowing down of MDF imports, with Q1 run rates at 1,000-1,500 cubic meters compared to historical highs of 15,000-20,000 cubic meters per month. Stricter implementation of BIS norms, covering smaller domestic players from September onwards, is expected to further reduce competition from non-compliant unorganized segments. Management clarified that BIS norms are not being diluted and are expected to become more stringent, which is seen as a positive for organized players.

The company's gross debt at the end of June was Rs. 386 crore, with net debt at Rs. 233 crore after accounting for cash and bank balances. Greenpanel has zero utilization of its funded working capital facilities, indicating a comfortable leverage and liquidity position. No new CAPEX is planned for FY26 or FY27, and the primary focus for cash flow will be servicing existing debt and recovering additional working capital investments.

Plywood sales are yet to stabilize, though the company is taking steps to improve synergies with its existing MDF business on both market and cost fronts, expecting a revival over the next few quarters. Export volumes were almost flat sequentially but de-grew by 40% year-on-year, primarily due to the opportunistic nature of export plays and disruptions from the recent geo-political situation in the Middle East.