Detailed narrative
Q1 FY26 Performance Overview
Greenply Industries reported a consolidated quarterly revenue of INR601 crores in Q1 FY26, representing a 2.9% year-on-year growth. Consolidated core EBITDA grew by 6.4% Y-o-Y to INR62 crores, with the core EBITDA margin expanding to 10.3% from 9.9% in Q1 FY25. PBT, before accounting for equity investee losses, foreign exchange adjustments, and exceptional items📎, increased by 33% Y-o-Y to INR50 crores. Despite these gains, the company faced liquidity challenges and a subdued June, impacting overall performance.
Plywood Segment: Challenges and Outlook
The Plywood segment experienced a marginal volume degrowth of 3.1% year-on-year in Q1 FY26, although realizations grew by 4.1% Y-o-Y to INR255 per/sqm. The core EBITDA margin for Plywood improved slightly to 7.9% from 7.8% in Q1 FY25. Management noted that achieving double-digit volume growth for the full year in Plywood now looks difficult, but they remain optimistic for a bounce-back in H2 FY26 and aim for a double-digit margin for the full year due to operating efficiencies.
MDF Business: Strong Margins and Capacity Expansion
The MDF business performed exceptionally well, with revenue of INR147.3 crores and volume at 46,350 CBM. Realizations improved by 3.1% Y-o-Y to INR31,763 per CBM, and EBITDA margins significantly improved to 17.4% in Q1 FY26 from 15% in the previous quarter. The Vadodara plant is operating at full capacity, prompting a planned 25% capacity expansion in August 2025 with a capex of INR10-12 crores. The company is confident of achieving double-digit volume growth and 16% plus margin guidance for FY26, with an internal target of 15-20% growth.
New Business Ventures: Hardware & PVC/WPC
The Furniture and Fittings JV commenced sales, achieving a minimalistic revenue of INR6.5 crores but reporting a PAT loss of INR10.8 crores (Greenply's share INR5.4 crores). Management expects this business to show sizable growth by next year, with the dealer base crossing 500-600 numbers, and anticipates a full-year PAT loss of INR18-20 crores for FY26. For the PVC/WPC business, Greenply aims for a top line revenue of INR200-225 crores in the next three years, leveraging in-house manufacturing to replace core products and expand market penetration.
Debt, Inventory, and Receivables Management
Net debt increased to INR538 crores in Q1 FY26, primarily due to inventory buildup in both Plywood (in response to import restrictions) and MDF (ahead of a plant shutdown). Management expects both inventories to be liquidated by the end of H1 FY26 and by September, respectively. They are confident that net debt will decline and return to a guided level of 0.5 by the end of the year, also expecting a reduction in the number of days on receivables by Q3 FY26.
Corporate Guarantees and GMEL Stake Reduction
Greenply successfully reduced its stake in Greenply Middle East Limited (GMEL) from 49% to 19%, decreasing its exposure and contingent liability from USD5.8 million to USD3.8 million (INR50 crores to INR32 crores). This reduction in stake also means the company will no longer book operating losses from GMEL from Q2 FY26. Other corporate guarantees, such as INR55 crores for the SAMET JV, remain in place, while a USD3 million guarantee for the Singapore entity is expected to be released as it is not utilized.
Industry Dynamics and BIS Norms
Management expressed bullishness on the impact of BIS norms and Quality Control Orders (QCO) in H2 FY26 and beyond, viewing them as a significant positive change for the industry. They believe these regulations will foster a 'Make in India' hub for furniture and improve governance, despite an analyst's concern about potential dilution of norms. In the MDF market, while import inventory has cleared, domestic oversupply continues, leading to price competition. However, Greenply is confident in maintaining its margins due to its strong brand and distribution network.