Greenpanel Inds.

Greenpanel Industries reported a challenging Q3 FY25 with net sales declining 7% year-on-year to ₹358.12 crores, compared to ₹384.99 crores in the corresponding period. Post-tax profits saw a significant 75% drop, falling to ₹8.5 crores from ₹34.61 crores in Q3 FY24. EBITDA margins compressed sharply by 1,229 basis points, settling at 5% (₹17.78 crores), primarily due to increased raw material costs and lower domestic realizations.

The MDF segment contributed 91% of the top line, with sales of ₹325.93 crores. Domestic MDF sales volume remained flat year-on-year but showed an 11% quarter-on-quarter growth. However, domestic realizations were lower by 5.5% YoY at ₹29,867 per cubic meter, while export realizations increased by 2.2% YoY to ₹19,479 per cubic meter. Blended MDF realizations were down 4.2% at ₹28,079 per cubic meter. Capacity utilization for Uttaranchal was 82% and Andhra was 58%, leading to a blended utilization of 66%.

Plywood sales experienced a de-growth of 16.1% to ₹32.19 crores, with volumes lower by 16.9% at 1.28 million square meters. The unit operated at 44% utilization, and EBITDA margins stood at 3.1%. Realizations were up by 1.2% YoY at ₹252 per square meter. Management indicated that the segment is undergoing significant restructuring, including changes to the sales team and dealer network, which is taking longer than expected but is projected to yield 15-20% volume improvement from FY26 onwards.

A steep 25% year-on-year increase in wood prices significantly impacted margins. Timber procurement costs were ₹7.15 per Kg in North India and ₹6.23 per Kg in South India, with a blended rate of ₹6.66 per Kg. This, combined with a 4% price cut introduced in mid-August and increased fuel costs, led to the substantial margin compression. Management expects wood prices to remain volatile and potentially increase further until new crops arrive in July.

The company's expansion project, involving ₹219 crores, is progressing well and is expected to achieve commercial production by the end of Q4 FY25. For FY26, Greenpanel targets 8-10% volume growth on existing capacity and 40-50% utilization for the new plant. The new plant is anticipated to significantly improve margins due to low incremental fixed costs once it reaches 40% capacity utilization, which is also its breakeven point.

MDF imports into India surged from approximately 10,000 cubic meters per month in Q2 FY25 to 20,000-22,000 cubic meters per month in Q3 FY25. This increase is attributed to OEMs stocking up ahead of the expected implementation of BIS norms, which were announced for February 11th. Management hopes that BIS norms will restrict imports and alleviate some pricing pressure in the domestic market, particularly in the OEM segment.