Greenpanel Industries Limited — Q4 FY25 earnings call

Call held 22 May 2025

Management summary

Greenpanel Industries reported a challenging Q4 FY25 with a 25% YoY decline in MDF domestic volumes and a 15.3% fall in MDF sales value, primarily due to the discontinuation of commercial grade MDF in anticipation of BIS QCOs. Despite this, MDF EBITDA margins improved QoQ to 16.3% driven by EPCG incentives. The company anticipates a ~30% volume growth in FY26, supported by existing lines and the new thin MDF capacity, with expectations of improved margins and a 5-7% fall in timber prices. Net debt stood at Rs. 165 crore, including the expansion project.

Highlights

  • MDF EBITDA margins improved QoQ to 16.3% due to EPCG incentives.

  • Plywood EBITDA margins improved to 12.1% due to write-back of provisions.

  • Export volumes for MDF increased by 34% in Q4 FY25.

  • Domestic MDF realizations were higher by 7.4% YoY at Rs. 31,214 per cubic meter due to a higher mix of value-added products (50% vs 44%).

  • Expect improved performance in FY26 with the addition of thin MDF and anticipated BIS QCO implementation boosting demand.

Concerns

  • MDF domestic sales volumes fell by 25% YoY in Q4 FY25 due to discontinuation of commercial grade MDF.

  • Net sales in Q4 FY25 were Rs. 338.94 crore, down from Rs. 396.08 crore in the corresponding period.

  • Post-tax profits for Q4 FY25 were lower by 1% at Rs. 29.39 crore compared to Rs. 29.81 crore in the corresponding quarter.

  • Net working capital increased by 8 days YoY to 36 days due to lower turnover and high inventory levels.

  • FY25 MDF EBITDA margins fell to 11.7% due to a 3.7% fall in domestic realizations and a 23% increase in wood prices.

Key financials

  1. Net Sales ₹338.94 Cr -14.4%YoY
  2. MDF Sales Value ₹305.17 Cr -15.3%YoY
  3. MDF EBITDA Margin 16.3%
  4. Plywood EBITDA Margin 12.1%
  5. Post-tax Profits ₹29.39 Cr -1.4%YoY
  6. Net Debt ₹165 Cr

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
    -25% Domestic Sales Volume Growth34% Export Sales Volume Growth₹31,214/cubic meter Domestic Realizations₹22,389/cubic meter Export Realizations₹29,961/cubic meter Blended Realizations
  • Plywood
    -12% Volumes Growth₹270/square meter Realizations

Capital allocation

high confidence
  • Capex ₹30 Cr
    • Balance for new line ₹25 Cr
    • Existing business ₹10 Cr
    We are not expecting any major capex. So, I would say approximately Rs. 25 crore of the balance capex for the new line. And maybe if we decide to do some small capex for the existing business, I would put that at a maximum of about Rs. 10 to Rs. 15 crore.
  • Debt Net ₹165 Cr
    Net debt stands at Rs. 165 crore as on 31st March 2025, inclusive of Rs. 336 crore for the expansion project.

Guidance & targets

Volume

  • Total Volume Growth Volume · FY26 · High confidence ~30%
    So combined as a company, this would give us about a 30% volume growth, including the production considered for the new line.

    — Shobhan Mittal

  • Existing Lines Volume Growth Volume · FY26 · High confidence 11-12%
    So on account of volumes, from the existing lines, line one and line two, we are expecting about 11%-12% growth in terms of volumes in the coming year.

    — Shobhan Mittal

  • Export Volume (Additional) Volume · FY26 · High confidence 80,000 cubic meters
    And we are expecting about 80,000 cubic meter additional volume coming from the export business.

    — Shobhan Mittal

Capacity Utilization

  • New Line Capacity Utilization Capacity Utilization · FY26 · High confidence 72,000 cubic meters
    And because the first quarter is quite muted for the new line, so we're expecting about 72,000 cubic meter capacity utilization over the year from the new line.

    — Shobhan Mittal

  • New Plant Capacity Utilization Capacity Utilization · FY26 · High confidence 35%
    We are targeting capacity utilization of 35% for FY'26.

    — V. Venkatramani

Profitability

  • MDF EBITDA Margins (ex-EPCG) Profitability · FY26 · High confidence ~12%
    I think I would be looking at approximately a 12% margin in MDF and a 7% to 8% margin in plywood, of course excluding the EPCG incentive.

    — V. Venkatramani

  • Plywood EBITDA Margins (ex-EPCG) Profitability · FY26 · High confidence 7-8%

    — V. Venkatramani

Raw Material Costs

  • Timber Prices Fall Raw Material Costs · FY26 · Medium confidence ~5-7%
    I think we would probably expect to see around 5% to 7% fall in timber prices during FY'26.

    — V. Venkatramani

Tax Rate

  • Effective Tax Rate Tax Rate · FY26 · High confidence ~20%
    But for FY'26, I would probably expect the tax rate of around 20%.

    — V. Venkatramani

Expenses

  • Depreciation Expenses · FY26 · High confidence Rs. 100-102 crore
    I would say depreciation of approximately Rs. 100 crore to Rs. 102 crore.

    — V. Venkatramani

  • Fixed Cost Increase (New Plant) Expenses · Annual · High confidence Rs. 5-6 crore
    And the third point is there will be very small increase in fixed cost with the new plant. So, I am expecting an annual increase in fixed cost of only about Rs. 5 to Rs. 6 crore for the new plant.

    — V. Venkatramani

Incentives

  • Balance EPCG Incentive Incentives · FY26 and FY27 · High confidence Rs. 51 crore
    So the balance of about Rs. 51 crore is expected over FY'26 and FY'27.

    — V. Venkatramani

Realization

  • New Thin MDF Industrial Realization Realization · Initial · High confidence Rs. 25,000-26,000 per cubic meter
    So, for the thin-grade industrial MDF, realisations will be approximately about 25,000 to 26,000 per cubic meter.

    — V. Venkatramani

Product Mix

  • New Plant Value-Added Product Mix Parity Product Mix · Next 3 years · High confidence 3-year exercise
    New plant to have the same mix of value-added products, it's possibly a 3-year exercise.

    — V. Venkatramani

What to watch in Q1 FY26

New Thin MDF Line Ramp-up

Q2 FY26
Current Optimization phase, under plant supplier control
Target Substantial output and handover by Q2 FY26

Why it matters

Successful ramp-up is crucial for achieving FY26 volume growth targets and realizing benefits from the expansion project.

But I think we should start getting a substantial contribution of the capacity from quarter two of this year. Because at the moment, the line is still under the control of the plant supplier. And it is still under the optimization phase. Because it's, let's say, a very technologically advanced line. And it's a very high speed line. Hence, it's a longer period of optimization. Hence, we foresee that by quarter two, we should have the line handed over to us and we should start seeing a fair amount of output coming out of it.

Risks & concerns

  • Raw material price increase

    medium

    A 23% price increase in wood prices year-on-year impacted FY25 EBITDA margins by 6.7%.

    Management acknowledged

  • Optimization period for new technologically advanced line

    medium

    The new high-speed line requires a longer optimization period, with substantial contribution expected only from Q2 FY26.

    Management acknowledged

  • Unorganized segment non-compliance during grace period

    low

    The unorganized segment is not fully compliant with BIS during the grace period, potentially impacting Q1 FY26 volumes.

    Management acknowledged

Q&A highlights

8 direct
AP plant capacity utilization and ramp-up plans Direct
So on account of volumes, from the existing lines, line one and line two, we are expecting about 11%-12% growth in terms of volumes in the coming year. And because the first quarter is quite muted for the new line, so we're expecting about 72,000 cubic meter capacity utilization over the year from the new line. So combined as a company, this would give us about a 30% volume growth, including the production considered for the new line.

Clarifies the expected volume contribution from both existing and new capacities, providing a comprehensive growth outlook.

Asked by Keshav Lahoti

Quantification of one-time income (EPCG, plywood write-back) Direct
Yes, in MDF it has come from EPCG incentives. So that contributed Rs. 35 crore during the quarter. And on the plywood side, we have written off turnover discount provisions to the extent of Rs. 1.25 crore.

Provides specific figures for one-time gains, helping analysts adjust for non-recurring items in profitability analysis.

Asked by Keshav Lahoti

EPCG incentive recognition and total amount Direct
Yes, so the total incentive expected from EPCG scheme is about Rs. 86 crore. We have accounted for Rs. 35 crore in FY'25. So the balance of about Rs. 51 crore is expected over FY'26 and FY'27.

Details the total EPCG benefit and its staggered recognition, impacting future earnings.

Asked by Keshav Lahoti

Underlying demand for MDF and impact of new capacities Direct
Market demand for the general growth of the MDF industry continues to remain strong as opposed to other industries at 15% to 20%. And what we foresee is that there are no major additional capacities also coming in. So, with the fact that imports are going to be quite muted and the market is on a growing trend and the fact that no new, large additional capacities are coming online in the next financial year, the benefit of this should shift towards the existing producers.

Highlights the strong underlying demand for MDF and the company's competitive advantage due to limited new capacity additions in the market.

Asked by Pankaj Parab

Drivers for market share shift from imports to domestic for thin MDF Direct
Greenpanel as a company is in a position to offer the entire product portfolio, the fact that we're located in the south of India having competitive advantage in terms of freight, also with respect to serviceability and resulting in working capital reduction, inventory reduction for our dealers and channel partners, there would be a preference shift towards us which would result in us gaining market share in this segment for sure.

Explains the strategic advantages Greenpanel possesses to capture market share in the thin MDF segment, moving away from imports.

Asked by Yash Sonthalia

MDF margin recovery in FY26 despite Q4 pressure Direct
Okay, the actual reason why we are expecting an improvement in the margin, one is we are focusing 10% to 12% growth in domestic volumes from the existing plants. So, improving capacity utilization at the older plants will have a positive impact on the margin. We are expecting wood prices to come down this year compared to what they were last year. And the third point is there will be very small increase in fixed cost with the new plant.

Provides clear reasons for the expected margin improvement in FY26, including volume growth, lower raw material costs, and controlled fixed costs.

Asked by Utkarsh Nopany

Impact of BIS on unorganized segment and price discipline Direct
So, due to the BIS implementation, we also see the threat from the unorganized segment minimizing going forward because when the new standards are declared and brought into notification, for compliance, there will definitely be a cost increase on account of the unorganized players. And that would result in lesser price-cutting power on their part, or even to the extent of passing on some of that cost on the market, minimizing the difference between them and the organized segment.

Explains how regulatory changes (BIS) will create a more level playing field, reducing aggressive pricing from unorganized players and benefiting organized players.

Asked by Bhargav Buddhadev

Expected realization for new thin MDF line Direct
So, for the thin-grade industrial MDF, realisations will be approximately about 25,000 to 26,000 per cubic meter.

Gives specific realization figures for the new product segment, crucial for revenue modeling.

Asked by Arun Baid

3 min read 7 chapters

Detailed narrative

Q4 & FY25 Performance Overview

Greenpanel Industries reported Q4 FY25 net sales of Rs. 338.94 crore, a decrease from Rs. 396.08 crore in the prior year. Post-tax profits for the quarter were Rs. 29.39 crore, a marginal 1% decline from Rs. 29.81 crore. For the full year FY25, post-tax profits were Rs. 72.11 crore, a 49% reduction, primarily due to a 3.7% fall in domestic realizations and a 23% increase in wood prices, which led to a 615 basis point drop in EBITDA margins to 10.9%.

MDF Segment Dynamics

The MDF segment saw domestic sales volumes fall by 25% YoY in Q4 FY25, largely due to the discontinuation of commercial grade MDF, which was nil in the quarter compared to 40,924 cubic meters in Q4 FY24. Despite this, domestic realizations increased by 7.4% YoY to Rs. 31,214 per cubic meter, driven by a higher mix of value-added products (50% vs 44%). Export volumes, however, grew by 34% to 14,458 cubic meters. MDF EBITDA margins stood at 16.3% in Q4, benefiting from EPCG scheme incentives.

Plywood Segment Performance

Plywood volumes in Q4 FY25 were lower by 12% YoY, with sales de-growth of 5.3% to Rs. 33.77 crore. The unit operated at 42% capacity utilization. Plywood realizations increased by 8% YoY to Rs. 270 per square meter. EBITDA margins for the plywood segment were 12.1%, positively impacted by a write-back of provisions for turnover discounts amounting to Rs. 1.25 crore.

Expansion Project & Capacity Outlook

Commercial production has commenced at the expansion project, with the company targeting a 35% capacity utilization for the new line in FY26, contributing approximately 72,000 cubic meters. Overall, Greenpanel expects about 30% volume growth in FY26, including an 11-12% growth from existing lines and an additional 80,000 cubic meters from the export business. The new line, being technologically advanced, is in an optimization phase, with substantial output expected from Q2 FY26.

EPCG Incentives and Financial Impact

The company recognized Rs. 35 crore from EPCG incentives in Q4 FY25, contributing to the higher MDF EBITDA margins. The total EPCG incentive expected is Rs. 86 crore, with the remaining balance of Rs. 51 crore anticipated to be recognized over FY26 and FY27. This incentive is a customs duty waiver on imported machinery, which was accounted for after the plant's commissioning and commercial production began.

Market Dynamics & Regulatory Impact

The market for MDF is seeing strong demand growth of 15-20%, with import-concentrated segments shifting towards domestic supply. The upcoming implementation of BIS QCOs from February 2026 is expected to boost demand for domestically manufactured furniture and raw materials like MDF and plywood. This regulation will also minimize the threat from the unorganized segment by increasing their costs and reducing their price-cutting power, thereby benefiting organized players like Greenpanel.

Capital Allocation & Debt Position

Net debt as of March 31, 2025, stood at Rs. 165 crore, which includes Rs. 336 crore allocated for the expansion project. For FY26, the company anticipates a modest capex of approximately Rs. 25 crore for the balance of the new line and an additional Rs. 10-15 crore for existing business, totaling Rs. 30-45 crore. The company also expects depreciation to be around Rs. 100-102 crore for FY26.

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