Greenply Industries Limited — Q3 FY25 earnings call

Call held 7 Feb 2025

Management summary

Greenply Industries reported a steady Q3 FY25 with consolidated revenue growing 5.6% YoY to INR 614 crores and core EBITDA up 7.2% YoY to INR 54 crores. While the plywood segment showed margin improvement and modest volume growth, the MDF business faced margin pressure and a plant shutdown, impacting volumes. The company remains optimistic about future growth driven by regulatory tailwinds like BIS implementation and new capacity additions, despite current liquidity challenges and raw material costs.

Highlights

  • Consolidated revenue grew 5.6% YoY to INR 614 crores in Q3 FY25.

  • Consolidated core EBITDA increased 7.2% YoY to INR 54 crores, with margins at 8.8%.

  • PAT for the quarter was INR 24 crores, impacted by an MTM gain of INR 4.62 crore and a JV loss of INR 4.72 crores.

  • 9-month consolidated revenue reached INR 1,839 crores, up 16.4% YoY, with core EBITDA at INR 170 crores (+33% YoY) and margins of 9.2%.

  • Plywood business saw 2.8% YoY volume growth and 5.6% YoY value growth in Q3 FY25, with core EBITDA margin improving to 8.4%.

  • MDF revenue was INR 134.6 crores with 42,259 CBM volume, but EBITDA margin declined to 10.4% due to high raw material costs and a plant shutdown.

  • Net debt stood at INR 413 crores, with a projected year-end net debt-to-equity ratio of around 0.55.

  • The company expects plywood margins to improve to 10% by Q4 FY25 and targets ~7% plus plywood volume growth and ~50% MDF growth for FY25.

Concerns

  • Liquidity challenges in the market affecting receivables

  • Dumping of MDF from China and Vietnam

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹614 Cr
    YoY +5.6%
  • Consolidated Core EBITDA
    ₹54 Cr
    YoY +7.2%
  • Consolidated Core EBITDA Margin
    8.8%
  • Consolidated PAT
    ₹24 Cr
  • Net Debt
    ₹413 Cr

9M

  • Consolidated Revenue
    ₹1,839 Cr
    YoY +16.4%
  • Consolidated Core EBITDA
    ₹170 Cr
    YoY +33%
  • Consolidated Core EBITDA Margin
    9.2%

What they filed

Q1 FY27: revenue up 20.6%, net profit up 35.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue640 614 649 601 689 +8%673 +10%776 +20%725 +21%
EBITDA53 51 46 52 51 −4%51 +0%87 +89%73 +40%
Net profit18 24 17 28 16 −11%14 −42%31 +82%38 +36%
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

  • Plywood Business
    2.8% Q3 Volume Growth5.6% Q3 Value Growth8.4% Q3 Core EBITDA Margin₹1,445 Cr 9M Revenue7.5% 9M Revenue Growth₹119 Cr 9M Core EBITDA11.3% 9M Core EBITDA Growth8.2% 9M EBITDA Margin
  • MDF Business
    ₹134.6 Cr Q3 Revenue42,259 CBM Q3 Volume31,850 Rs per CBM Q3 Realizations2.2% Q3 Realizations Growth10.4% Q3 EBITDA Margin

Guidance & targets

Profitability

  • Plywood EBITDA Margin Profitability · Q4 FY25 · High confidence 10% plus
    But I think things will ease out. I can definitely see that this quarter will be much better than the previous quarter, no doubt about it. And at the same point of time, we have taken many actions on the cost side also. As well as, as I just said, that we are also taking another price hike of around 1.5% effective February. So of course, it is not for the full quarter. But all these things, our initiatives clearly shows us that we should be able to move to 10% plus margin.

    — Manoj Tulsian

  • MDF Full Year Margin Profitability · FY25 · Medium confidence 13-14%

    Previously 16% plus → 13-14%

    However, in the fourth quarter, we believe that the revenue will substantially be better and margins will be stronger. During the quarter, our EBITDA margins were lower due to higher raw material costs and plant shutdown. As a result, we are reducing our full year margin guidance to 13-14% as against earlier of 16% plus.

    — Sanidhya Mittal

Capacity

  • HDF Flooring Line Functionality Capacity · May '25 · Medium confidence fully functional
    Construction of our HDF flooring line has been delayed by 6 months due to the late arrival of major equipment, which is likely to arrive in the month of March and will be fully functional in the month of May '25.

    — Sanidhya Mittal

  • Glue Plant Completion Capacity · this quarter (Q4 FY25) · High confidence completed
    Construction of our glue plant is also likely to be completed in this quarter.

    — Sanidhya Mittal

  • Plywood New Capacity Addition Capacity · High confidence 13.5 million square meters
    It's already announced. I think INR134 crores, to be very precise is the number what we have declared. This will give us a new capacity of 13.5 million square meters, which is almost an addition of 25% capacity over our present manufacturing capacity.

    — Manoj Tulsian

  • Plywood New Plant Commercial Production Capacity · FY27 · Medium confidence start commercial production
    And the timeline, we are expecting that in quarter 4 -- end of quarter 4 next year, we will be doing our trial runs, and we should be prepared for FY '27 to start commercial production from that particular plant, because there are still few approvals which is pending, so the work will still not start.

    — Manoj Tulsian

Capex

  • Plywood New Capacity Investment Capex · High confidence INR 134 crores
    It's already announced. I think INR134 crores, to be very precise is the number what we have declared. This will give us a new capacity of 13.5 million square meters, which is almost an addition of 25% capacity over our present manufacturing capacity.

    — Manoj Tulsian

Revenue

  • Samet JV Revenue Revenue · coming year (FY26) · Medium confidence INR 80-100 crores
    But just a ballpark number, I would say that definitely, we feel that touching anywhere around INR80 crores to INR100 crores in the coming year is a number which is doable. But it is very, very early because we will just step into the market.

    — Manoj Tulsian

Raw Material

  • Raw Material Prices (overall) Raw Material · another 6 to 9 months · Medium confidence start coming down
    I get a very strong now view from my team that maybe another 6 to 9 months, but we will see this raw material prices, supply is improving and the prices slightly start coming down.

    — Manoj Tulsian

  • Timber Prices Raw Material · after 9 to 12 months · Medium confidence expected to decline
    So -- but as I said that the filler which is coming from my plantation team is we are now nearing the end of this cycle of high timber prices. They are saying that another 9 to 12 months for sure, the timber availability will improve in India. That will continue to improve, and that will bring down the prices also.

    — Manoj Tulsian

Volume

  • Plywood Volume Growth Volume · FY25 · Medium confidence around 7% plus
    FY '25. So FY '25, the volume, I think we are at around 5.7% right now. And with quarter 4, we will try to be anywhere around 7% plus. Not easy, but definitely, we have plans.

    — Manoj Tulsian

  • MDF Volume Growth Volume · FY25 · Medium confidence almost a 50% growth
    And for MDF, we had initially targeted almost a 50% growth over last year. We should be around that number for the full year.

    — Manoj Tulsian

Risks & concerns

  • Liquidity challenges in the market affecting receivables

    high

    Dealers faced difficulty in paying on time, leading to lost volume opportunities as the company maintained stringent receivables policy.

    Management acknowledged

  • Dumping of MDF from China and Vietnam

    high

    Large quantities of imported MDF are hurting domestic industry, leading to subdued demand and inability to pass on increased costs.

    Analyst acknowledged

  • High raw material costs (timber) and unexpected plant shutdown in MDF

    medium

    MDF EBITDA margins declined due to higher raw material costs and a Siemens motor failure leading to plant shutdown, impacting Q3 volumes.

    Management acknowledged

  • Delay in HDF flooring line construction and glue plant completion

    medium

    HDF flooring line delayed by 6 months due to late equipment arrival; glue plant completion also pushed to Q4 FY25.

    Management acknowledged

  • Pre-dumping of imported goods before BIS/QCO implementation

    medium

    Importers have stocked up extra inventory for 2-3 months assuming normalization, which could temporarily delay the positive impact of regulations.

    Analyst acknowledged

  • Potential for unorganized players to pass on timber price declines to customers

    low

    Management believes BIS implementation will differentiate organized from unorganized players, making price competition less impactful.

    Analyst downplayed

Q&A highlights

3 direct
Impact of MDF plant shutdown on revenue Direct
About INR10 crores, I think.

Quantifies the direct financial impact of the unforeseen plant shutdown on MDF revenue for the quarter.

Asked by Sneha Talreja

Demand environment, liquidity challenges, and impact of BIS regulations on plywood Direct
I think liquidity was a larger issue than the demand. And that's where it has got muted. But I think there are external steps also which is taken by RBI now to infuse liquidity... But for sure, I see now going forward, things will be very, very positive for panel business and for plywood business. A, because of the implementation of BIS regulations, which will definitely curb imports in the near term.

Reveals the primary challenge (liquidity) affecting demand and highlights BIS regulations as a significant future tailwind for organized players.

Asked by Sneha Talreja

MDF imports/dumping from China/Vietnam and the impact of QCO implementation Direct
So post mid-April or starting early May, I feel that there will be increase in the domestic volume because I feel people have stocked up typically for 2, 3 months extra. So the moment imports are out, I feel there should be better demand, also better pricing available.

Addresses a major competitive threat (imports) and explains how upcoming Quality Control Orders (QCO) will benefit domestic organized players by reducing import pressure and improving pricing.

Asked by Aishwarya

3 min read 6 chapters

Detailed narrative

Q3 FY25 Consolidated Performance Overview

Greenply Industries reported a consolidated revenue of INR 614 crores in Q3 FY25, marking a 5.6% year-on-year growth. Core EBITDA for the quarter stood at INR 54 crores, increasing by 7.2% YoY, with the core EBITDA margin improving slightly to 8.8% from 8.7% in Q3 FY24. The company's PAT for the quarter was INR 24 crores, which was influenced by a one-time MTM gain of INR 4.62 crore on forex currency loans and a share of loss from the furniture and fittings JV amounting to INR 4.72 crores. For the nine months of FY25, consolidated revenue grew 16.4% YoY to INR 1,839 crores, with core EBITDA at INR 170 crores (+33% YoY) and margins of 9.2%.

Plywood Business Performance and Outlook

The plywood business demonstrated resilience in Q3 FY25, achieving a volume growth of 2.8% YoY and a value growth of 5.6% YoY. The core EBITDA margin for the segment improved by 40 basis points YoY to 8.4%. On a 9-month basis, plywood revenue was INR 1,445 crores, growing 7.5% YoY, with core EBITDA at INR 119 crores (+11.3% YoY) and an 8.2% margin. Management expects plywood margins to reach 10% plus by Q4 FY25, driven by cost actions and a 1.5% price hike effective February. The company also announced a new plywood investment of INR 134 crores to add 13.5 million square meters of capacity, representing a 25% increase, with commercial production targeted for FY27.

MDF Business Challenges and Revised Guidance

The MDF business recorded a revenue of INR 134.6 crores in Q3 FY25 with a volume of 42,259 CBM. Realizations improved by 2.2% QoQ to INR 31,850 per CBM. However, the EBITDA margin for MDF declined to 10.4% from 11.8% in the previous quarter, primarily due to higher raw material costs and an unforeseen plant shutdown in December caused by equipment failure. Consequently, the full-year MDF margin guidance has been revised downwards to 13-14% from the earlier 16% plus. The construction of the HDF flooring line has been delayed by 6 months, now expected to be fully functional by May 2025.

New Ventures and Debt Position

Greenply's furniture and fittings JV began manufacturing its Phase 1 product range in November, with initial sales expected in Q4 FY25. The company participated in two flagship exhibitions, receiving encouraging responses. The Samet JV is projected to achieve INR 80-100 crores in revenue in the coming year (FY26), though its production was delayed by 5-6 months due to machinery arrival and installation. On the financial front, consolidated net debt stood at INR 413 crores, with the net debt-to-equity ratio expected to be around 0.55 by year-end, despite ongoing expansion and new business line setups.

Regulatory Tailwinds and Market Dynamics

Management expressed strong optimism regarding the upcoming implementation of BIS regulations, effective February 25, 2025, which are expected to curb imports and significantly benefit organized players by differentiating product quality. While acknowledging pre-dumping activities by importers, the company anticipates improved domestic demand and pricing post-May, once these inventories clear. The shift in real estate sales towards luxury and ultra-luxury segments (from 10% to 30% of total volume sales units in the last 3 years) is also seen as a positive sign for organized players. Timber prices, a key raw material, are expected to start declining in 9-12 months as availability improves in India.

FY25 Volume Growth Targets

For FY25, Greenply is targeting a plywood volume growth of around 7% plus, up from the current 5.7%. For the MDF segment, the company aims for almost a 50% growth over the last year, expecting to be around that number for the full year. These targets reflect the company's plans to leverage improved market conditions and new capacities, despite the challenges faced in Q3.

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