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 Q2 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 Q2 FY 24 con-call of the company

– MDF business

  • MDF export volumes grew by 24% at 33,208 cubic meters. Domestic volumes were lower by 9% at 90,407 cubic meters and overall MDF volumes were down by 2% at 1,23,615 cubic meters
  • MDF Domestic realizations were lower by 2% year-on-year at INR 32,771 cubic meters while export realizations were lower by 23% at INR 17,538 per cubic meter. Blended MDF realizations were lower by 8% at INR 28,679 per cubic meter
  • We have maintained our market share in the retail segment even with the increase in domestic competition
  • The de-growth in domestic volumes is primarily due to reduction of sales in OEM segment which we had consciously chosen not to service due to the drastic fall in import prices
  • We have resumed servicing the OEM segment with a new product offering. Sales to OEMs – It was 12,000 cubic meters in quarter 2 and we are looking at approximately 46,000 to 48,000 cubic meters over the next six months
  • MDF EBITDA margins at 21.2% were impacted by steep increase in raw material cost, higher import volumes and increase in domestic competition
  • Uttarakhand MDF operated at 78% and AP plant operated at 69% with blended capacity utilization at 72% on a capacity of 6,60,000 cubic meters

– Plywood

  • Plywood sales volumes were lower by 19.6% at 1.64 million square meters and the unit operated at 50% during the quarter
  • Operating margins at 1.65% were impacted by lower volumes and increase in raw material cost
  • The raw material cost especially has gone up drastically and we are foreseeing this across all product categories, whether it’s MDF or plywood
  • If we look at north of India, there has been roughly a 10% increase in timber prices over the past one year. And if we look at south of India, I would say the price increase has been around 30%

– MDF industry scenario

  • If you look at Q1, imports were on an average between 25,000 to 30,000 cubic meters per month, whereas in this quarter, they have been close to 50,000 per month
  • The majority of the imports are coming from Vietnam and Thailand
  • MDF capacity in India – Currently, we are about 2.7 million cubic meters, and we estimate that we will move to about 3.5 million cubic meters by the end of next year i.e., FY25
  • Basically, from February 2024, BIS on any MDF sold in India would become mandatory
  • We can foresee that the market is growing at double-digit 15% to 18%. At this point of time, it’s a very peculiar situation because there have been drastic increases in capacities. So, there is like a gap between the supply and the demand at this point of time. But as the demand catches up, this pressure is going to ease off on all producer


  • We paid INR 27 crore towards MDF expansion project during Q2 aggregating to INR 93 crores till date
  • Work is progressing on the expansion project, and we estimate commercial production to be in Q3 FY25

– Balance sheet

  • Net debt has reduced by INR 14 crore during the quarter and stands at negative INR 179 crore as on 30th September 2023

– Guidance

  • We foresee that at the end of the year, we should be about 3% to 5% growth (MDF volume) over last year
  • We had guided for MDF margins in the range of 23% to 25%. Possibly now we are looking at the lower end of the guidance around 22% to 23%



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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