Greenpanel Industries Q4 FY26 earnings call

Greenpanel Industries reported a 'transformational year' in FY26, marked by the addition of a new MDF manufacturing line in Andhra Pradesh. Combined revenues for Q4 FY26 grew 15.5% YoY to INR391 crore, contributing to a full-year revenue of INR1502 crore, up 7.8% YoY. Despite these top-line gains, the company faced significant profitability challenges, recording a negative PBT of INR43.8 crore and PAT of INR29.1 crore for the full year. This was primarily attributed to a cumulative INR49 crore impact from adverse Euro FX movements, initial inefficiencies at the new Andhra plant, and higher interest and depreciation expenses.

The company demonstrated strong volume performance across its segments. MDF domestic volumes surged by 29.5% YoY in Q4 and 16.9% for the full year. Total MDF volumes, including exports, grew 12.9% YoY for FY26, aligning with previous guidance. Plywood volumes also saw an 18% increase in Q4, resulting in a nearly flat performance for the full year. Greenpanel's strategic focus on high-value products is evident, with such offerings constituting 43% of MDF volumes and 55% of value, driven by new launches like HDWR doors and Boil Black MDF.

Consolidated operating EBITDA, excluding one-off^📎 items, stood at INR35.4 crore (9.1% of revenues) in Q4 and INR132.7 crore (8.8% of revenues) for FY26. However, reported EBITDA for the full year was lower at INR94.2 crore (6.3% of revenues) due to the aforementioned impacts. Chemical costs, a significant component at 40-45% of raw material costs, escalated by 40-45%. To mitigate this, Greenpanel implemented a 15% price increase for MDF, although management noted that market discounting is already diluting its full effect.

The MDF industry's total capacity is estimated at 4-4.5 million cubic meters per annum, with domestic demand projected to grow at early double-digits to mid-teens. Greenpanel utilized 60% of its capacity in Q4 FY26, indicating ample headroom for organic growth. For FY27, management expressed 'optimistic caution' due to the volatile geopolitical situation in the Middle East, which has adversely affected supply chains and exports. The company's primary goal for the year is to pursue volume growth, retain/increase market share, and strive to maintain or improve margins.

Greenpanel maintains a strong balance sheet, with net debt at INR156 crore as of March end, having reduced over the year despite unfavorable FX movements. The company boasts industry-leading DSOs of 21 days and a core cash conversion cycle of 38 days. For FY27/28, capital expenditure plans are limited to sustenance capex, estimated between INR20-30 crore, with no significant growth capex announcements. The strategic focus is on strengthening the balance sheet and further reducing debt.

In response to external pricing pressures, Greenpanel is actively pursuing raw material rationalization and efficiency improvements. This includes finding solutions to reduce resin costs and consumption, as well as optimizing timber sourcing by exploring multiple species beyond Eucalyptus. While Eucalyptus remains 20-25% more expensive in South India, the company aims to find the right mix based on availability and cost, with a higher percentage of Eucalyptus consumption in North India due to proximity and cost-effectiveness.