Greenpanel Industries Limited — Q1 FY26 earnings call

Call held 1 Aug 2025

Management summary

Greenpanel Industries Limited reported a challenging Q1 FY26 with consolidated revenues at Rs. 323 crore and negative EBITDA of Rs. 12.4 crores, primarily due to the discontinuation of commercial-grade MDF sales, initial stabilization costs of the new thin panel plant, and adverse currency movements. Despite these headwinds, the company saw a 47% like-for-like domestic sales growth and maintained a 47% gross margin, aided by sequential timber price corrections. Management is focused on recouping lost volumes, regaining market share through cost savings, operating leverage, and leveraging favorable industry tailwinds like reduced imports and BIS norm implementation.

Highlights

  • Consolidated gross margins at 47% for Q1 FY26.

  • Domestic sales grew by 47% on a like-for-like basis (excluding discontinued commercial-grade MDF).

  • Timber prices lower by 7% sequentially, improving gross margins by ~2.5%.

  • Net debt at Rs. 233 crore, indicating comfortable leverage and liquidity.

  • No further meaningful capacity additions expected in the sector for FY26 and FY27.

  • MDF imports significantly slowed to 1,000-1,500 cubic meters/month from historical highs of 15,000-20,000.

  • BIS norms and stricter implementation covering smaller domestic players from September onwards.

Concerns

  • Consolidated revenues at Rs. 323 crore in Q1 FY26.

  • Reported EBITDA was negative Rs. 12.4 crores, PBT negative Rs. 47.4 crores, and PAT negative Rs. 34.6 crores.

  • Domestic MDF volumes degrew by ~8.5% YoY due to discontinuation of 37,000 cubic meters of commercial-grade MDF sales.

  • Adverse currency movement (Euro/INR FOREX loss) of Rs. 27.6 crores, with Rs. 26.5 crore unrealized.

  • Initial stabilization of new thin panel plant impacted margins by ~3% due to higher consumption (power and fuel).

  • Plywood sales yet to stabilize.

Key financials

  1. Revenue ₹323 Cr
  2. EBITDA ₹-12.4 Cr
  3. PBT ₹-47.4 Cr
  4. PAT ₹-34.6 Cr
  5. Gross Margins 47%
  6. MDF Revenue Growth — -12%YoY
  7. Plywood Revenue Growth — -3%YoY

What they filed

Q1 FY27: revenue up 6.6%, net profit up 103.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue337 359 375 328 396 +18%416 +16%399 +7%350 +7%
EBITDA30 17 48 -16 25 −17%41 +135%30 −38%30 +289%
Net profit19 9 29 -35 -6 −133%10 +20%1 −95%1 +104%
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

  • MDF
    4.4% Operating EBITDA
  • Plywood
    60% Operating EBITDA

Capital allocation

high confidence
  • Capex Capex disclosed
    No new CAPEX is planned.
  • Debt Gross ₹386 Cr · Net ₹233 Cr
    Our gross debt at June end was Rs. 386 crore, bulk of which is for the new plant at AP, which is almost at par with the March figures despite repayment of the scheduled tranches in Quarter 1 due to the unrealized FX loss on the Euro-denominated borrowings. Counting the cash and bank balance on hand, the net debt was Rs. 233 crore. And there was zero utilization of our funded working capital facilities, implying a comfortable leverage and liquidity position and thus financial strength for the company.
  • Liquidity Liquidity disclosed Comfortable leverage and liquidity position with zero utilization of funded working capital facilities and untouched working capital lines.
    Our gross debt at June end was Rs. 386 crore... Counting the cash and bank balance on hand, the net debt was Rs. 233 crore. And there was zero utilization of our funded working capital facilities, implying a comfortable leverage and liquidity position and thus financial strength for the company.

Guidance & targets

Volume

  • Total CBM Volume · FY26 · High confidence 550,000 CBM
    We are not changing anything on the guidance side in terms of volume or margins at this point of time... As of now, we want to maintain our guidance for the volume as well as our margins.

    — Shobhan Mittal

Profitability

  • Overall Margins Profitability · FY26 · High confidence maintain guidance
    We are not changing anything on the guidance side in terms of volume or margins at this point of time... As of now, we want to maintain our guidance for the volume as well as our margins.

    — Shobhan Mittal

  • Gross Margins Profitability · coming quarter · Medium confidence improve by 2-3%
    So, there is still some 2%, 3% at least on gross margins, which can improve via the timber cost saving.

    — Himanshu Jindal

  • Thin MDF Plant Breakeven Utilization Profitability · High confidence 40%
    40% capacity utilization, you should be able to see money coming in.

    — Himanshu Jindal

Capacity

  • Thin MDF Plant Utilization Capacity · FY26 · High confidence 30-35%
    I think the idea is to run this plant at least 30%-35% this year.

    — Himanshu Jindal

Product Mix

  • Value-added product production Product Mix · Q3 FY26 · High confidence start production
    So, probably we will start producing the value-added category from Quarter 3.

    — Shobhan Mittal

What to watch in Q2 FY26

MDF Volume Growth

Next quarter (Q2 FY26)
Current Degrew by ~8.5% YoY (domestic), almost flat sequentially (exports)
Target Recovery towards FY26 guidance of 5,50,000 CBM

Why it matters

Management is aggressively targeting market share and volume recovery to meet full-year guidance after a weak Q1.

Our aim is to counter pricing pressure through expected reduction in both raw material and other variable costs, as well as fixed cost optimizations and operating leverage by increasing volumes.

Risks & concerns

  • Pricing pressure/competition

    high

    Recent bunching up of capacity additions led to price and credit aggression by peers.

    Management acknowledged

  • Geo-political situation in Middle East

    medium

    Disrupted movements, impacting export volume growth.

    Management acknowledged

  • Excessive channel inventory

    medium

    Both domestic and imported inventory yet to be fully liquidated, impacting volume growth.

    Management acknowledged

  • FX movements (Euro/INR)

    medium

    Adverse currency movement led to significant unrealized loss of Rs. 27.6 crores.

    Management acknowledged

  • Plywood sales stabilization

    low

    Plywood sales are yet to stabilize, but steps are being taken for revival.

    Management acknowledged

Q&A highlights

8 direct
Guidance on volume and margin given Q1 performance. Direct
We are not changing anything on the guidance side in terms of volume or margins at this point of time. As mentioned earlier as well, there is pricing pressure in the market, but we are going to counter that with cost savings, both on the variable and fixed side, as well as operating leverage. And as of now, we want to maintain our guidance for the volume as well as our margins.

Reaffirms full-year guidance despite a weak Q1, indicating aggressive strategy for remaining quarters.

Asked by Keshav Lahoti

Strategy for achieving aggressive growth in remaining 9 months and price cuts. Direct
There have been schemes already in place from July. And as a company, we are very comfortable with our balance sheet at this point of time. Now the focus of the company is strongly going to be on recouping the market share that we have lost and on the growth side.

Highlights the company's shift to market share recovery and growth, potentially through schemes/discounts, and comfort with balance sheet.

Asked by Keshav Lahoti

Conversion of commercial-grade MDF volumes to industrial grade post-BIS. Direct
No, so, what we have noticed is that we have been able to convert a lot of that volume into a standard industrial grade because commercial grade was basically competing with industrial grade or the cheaper industrial grade from unorganized segment. So, we have been able to convert those volumes into our industrial grade sales. And not entirely, but the majority of it has already been done so.

Addresses how the company is adapting to regulatory changes (BIS) and retaining volumes by converting customers to higher-grade products.

Asked by Keshav Lahoti

Impact of BIS implementation on other industrial players and Greenpanel's specific issue with commercial grade. Direct
No, the commercial grade offering was specific to us.

Clarifies that the volume loss due to discontinuing commercial grade MDF was specific to Greenpanel, suggesting peers might not face the same direct impact from this particular issue.

Asked by Ritesh Shah

Achieving the 5,50,000 CBM target given Q1 performance and discontinued commercial grade. Direct
What we mentioned earlier, we are now focusing very strongly on the market share expansion. And as I mentioned earlier, I think cost is working in our favor. And as a company, our focus is now on the market share. We are not chasing margins.

Reinforces the aggressive market share strategy and reliance on cost savings and operating leverage to meet volume targets, even if it means not chasing margins in the short term.

Asked by Udit Gajiwala

Quantification of cost savings and how fixed/variable costs will come down. Direct
We start with timber, first of all. Timber, the prices are already cooling off as you already know. So, there is some impact which has already come into picture in Quarter 1 consumption. We know our purchase rates. They are coming down as well. So, there is still some 2%, 3% at least on gross margins, which can improve via the timber cost saving.

Provides specific details on cost reduction drivers (timber prices) and their expected impact on gross margins (2-3%).

Asked by Akash Shah

Forex loss and hedging strategy for Euro borrowings. Direct
You see, the FX loss which happened in this quarter was exceptional. You are aware of the tariff wars and the consequence of this on the euro-dollar, largely on euro-dollar, which is why you are seeing fluctuations. Now, what we need to understand and appreciate, we have a 10-year loan on the new line, which is largely what we have as gross debt today. Now, the repayments of this is to be made every six months, for the next 10 years. To get a hedge in place for a full 10-year, A, the markets are not there. B, even if someone wants to sell it to us, it is going to be ultra expensive, even if there is something possible. So, I think the company here has been following a very, I think the right approach, which is not to hedge the entire exposure, but to hedge tranches, which are going to be due in the short term.

Explains the company's pragmatic approach to hedging long-term Euro debt, focusing on short-term tranches due to market limitations and cost, and acknowledges the exceptional nature of the Q1 FX loss.

Asked by Pathanjali Srinivasan

Dilution of BIS norms and its impact on the new plant. Direct
I think this is completely contradictory to the information that we have because firstly, there has been no change in the BIS norms in terms of grade, that has been ongoing so far. And based on the new norms that will come in, which are still on the publication stage and hopefully will go into effect in the next, hopefully couple of months, those will tend, will actually be more segregated and more stringent than they are today. So, I do not understand where this point of dilution comes from or how some manufacturers are commenting that it has been diluted.

Addresses a critical regulatory concern, clarifying that BIS norms are not being diluted and are expected to become more stringent, which could benefit organized players.

Asked by Yash Sonthaliya

3 min read 7 chapters

Detailed narrative

Q1 FY26 Performance Overview

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.

MDF Volume & Market Share Strategy

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.

Margin Performance and Cost Optimization

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.

New Thin Panel Plant Stabilization

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.

Regulatory Environment & BIS Norms

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.

Capital Structure and Debt

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 Business & Exports

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.

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