Hello Sir,

Hope you are doing well.

I have always been fascinated with stocks from building products industry. In the past, have covered several stocks from this space like Cera Sanitaryware, Carysil, Century ply, Greenply, Greenpanel, etc. and mostly they have delivered huge returns over longer periods of holding.

Recently I was again looking at Greenpanel Industries to understand the scenario in the MDF space.

Greenpanel is the largest player in India in the MDF (medium density fibre board) space with 6,60,000 CBM capacity and is expanding further by 2,31,000 CBM which is likely to commence operations in FY 25.

Below, we have shared interesting insights from the Q1 FY 24 con-call of the company. Hope you find the details useful for your own investments or to add the stock to your watch list.


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Greenpanel Industries – Insights from Q1 FY 24 con-call of the company

– MDF segment

  • MDF sales fell by 13% at Rs 340.17 crores and contributed 88% of the top line
  • MDF export volume stood at 27,430 CBM (cubic meters). Domestic volumes were 88,368 CBM and overall MDF volumes were 1,15,798 CBM
  • Domestic realizations were lower by 1.26% at 32,925 per CBM, while export realizations were lower by 25.05% at Rs 17,945 per CBM. Blended MDF realizations were lower by 6.28% at Rs 29,376 per CBM
  • In Q1, the mix of industrial was 46% of the domestic volumes and value-added products was 54% of the domestic volumes
  • Uttarakhand MDF operated at 69% and Andhra plant operated at 76% with blended capacity utilization at 74% on capacity of 6,60,000 cubic meters
  • Sales volumes were lower during the quarter due to the maintenance shutdown of Rudrapur plant for 19 days during April
  • We suffered a volume loss of approximately 6000 CBM due to the maintenance shutdown at Rudrapur MDF plant in April
  • MDF’s EBITDA margins at 20.4% were impacted by maintenance shutdown of Rudrapur plant for 19 days, higher brand spends at Rs 14.9 crores which equates to 3.9% of sales, increase in wood and core veneer prices
  • We are curtailing export volumes. We are letting go of orders which are not suitable to us in terms of profitability and cost, but at the same time reallocating that capacity to sort of let’s say higher realizing OEM sales in the domestic market

– MDF industry scenario

  • On the demand side the market is growing as per the historical industry norms
  • Of course, there is an added pressure of additional supplies that have come in and import prices have fallen, which has resulted in additional imports coming in
  • We don’t foresee this to be very long-lasting and we are quite confident of achieving at this point of time the growth numbers that we had initially projected
  • Imports, yes, they are sort of stable at this price and at this quantity at this point of time. We don’t foresee this increasing dramatically. I think these are already at a peak
  • The pressure of pricing on account of imports is on the OEMs and the large consumer segments who are direct importers
  • On the retail side at this point in time, we are not seeing any substantial pressure on account of realizations, so they have been maintained

– Raw material

  • There has been a price increase in the timber prices across all segments
  • As compared to Q4, the timber prices were higher by about 2% at Uttarakhand and 3% at Andhra plant
  • During the current month, Rudrapur has seen a slight reduction, whereas Andhra the price change has been over 10%
  • Resin – We had seen a marginal reduction in Q1 as compared to Q4 of last year. But I think during the current month we are seeing greater fall so probably as compared to Q1, we’ll have resin prices lower by 10% in this quarter

– Guidance

  • Gross margins are more or less likely to remain at this level of 58.1% for the company as a whole and 59.6% for the MDF segment provided there’s no major change in the domestic-export ratio
  • We had said 10% growth in plywood and 12% to 15% growth in MDF
  • We have already given guidance of 23% to 25% (EBITDA) for the MDF division



Disclaimer: This is not a recommendation to buy/sell Greenpanel Industries. The securities quoted are for illustration only and are not recommendatory.


Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/


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