Greenply Industries Limited Q3 FY26 Earnings Call Summary

Summary

Greenply Industries Limited - Q3 FY26 Earnings Call Summary Thursday, February 05, 2026 12:00 PM

Event Participants

Executives 3 Manoj Tulsian (Joint Managing Director and CEO), Sanidhya Mittal (Joint Managing Director), Sanjiv Keshri (CFO)

Analysts 6 Fenil Brahmbhatt (Choice Institutional Equities), Hrishikesh Bhagat (Kotak Mutual Funds), Karan Bhatelia (Asian Markets Securities), Parth Bhavsar (Investec), Rehan Saiyyed (Trinetra Asset Managers), Sneha Talreja (Nuvama), Utkarsh Nopany (Anand Rathi)

Financials & KPIs

Geographic & Segment Commentary

• Plywood: Delivered 12.5% volume growth and 8.9% value growth (₹521.7 crores) in Q3. The segment is benefiting from a “three-brand” strategy with significant traction in the mid-segment “Ecotec” brand, which management expects to eventually become the company’s largest brand. Asset quality remains stable as the company shifts more towards in-house manufacturing, reducing trading volumes from 43% to 34% YoY.

• MDF: Revenue stood at ₹152 crores, up 11.7% YoY. While the Vadodara plant capacity was expanded from 800 to 1,000 CBM, initial glitches in October/November forced the company to trade at higher costs, depressing margins. Operations stabilized in January with record production levels, leading to a 20%+ volume growth outlook for Q4.

• West India (MDF): Management emphasized their unique competitive position as the only MDF producer in Western India. This regional dominance is the primary driver behind the decision to double down on the Vadodara site for the next phase of expansion.

Company-Specific & Strategic Commentary

• MDF Capacity Expansion: The Board approved ₹425 crores (including GST) for a second MDF line at Vadodara (700 CBM/day). The project has a revenue potential of ₹600 crores, with commissioning expected in Q2 FY28 (18 months); it will focus on “thin” boards while the existing line handles “thick” boards.
• Distribution Depth: Engaged a consulting firm for 18+ months to improve SFA (Sales Force Automation) and plant supply-side efficiencies. This has successfully addressed past order fulfillment gaps and is driving the current double-digit volume recovery.
• Product Launches: Trial production for HDF flooring started in December; commercial production is slated for March 2026 following the correction of initial technical glitches.
• Export Strategy: Management remains focused on the domestic market, noting that current export realizations for Indian players are often at or below cost due to global competition.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

MDF Margin Miss (Utkarsh Nopany)

• Question: Why were MDF margins significantly lower than the 16% guidance?
• Answer: Capacity expansion in Q2/Q3 caused production deficits in Oct/Nov. To protect dealer relationships, the company sourced material externally at higher costs, hitting margins by ~200 bps. (Manoj Tulsian/Sanidhya Mittal)

Capital Allocation & ROCE (Hrishikesh Bhagat)

• Question: Does current MDF performance justify the ₹425 crore incremental investment given low ROCE?
• Answer: While short-term ROCE is diluted compared to standalone plywood, MDF is the future of the industry. The second line at the same site gains land, manpower, and specialization (thin vs. thick) efficiencies that will eventually bring ROCE to 16-18%. (Manoj Tulsian)

New MDF Line Specs (Parth Bhavsar/Karan Bhatelia)

• Question: What is the rationale for the second line and will it focus on specific products?
• Answer: The new 700 CBM line will use German technology. It will be dedicated to thin boards (35-40% of the market), allowing the existing line to run thick boards continuously without frequent stopovers for change-overs. (Sanidhya Mittal)

Furniture/Hardware JV (Fenil Brahmbhatt)

• Question: When will the hardware JV turn profitable?
• Answer: Expect 30-35% growth next year but continued losses. Profitability is expected in FY28 once Phase 2 manufacturing begins in India, replacing expensive imports from Turkey. (Manoj Tulsian)

Key Takeaway

Greenply Industries delivered a resilient Q3 FY26, characterized by a return to double-digit volume growth in Plywood (12.5%) and MDF (14.5%). Consolidated revenue grew 9.6% YoY to ₹673.4 crores, though consolidated margins were tempered by temporary operational glitches during the MDF capacity ramp-up at Vadodara. Strategically, the company is pivoting toward the mid-value “Ecotec” brand to capture mass-market share and has committed ₹425 crores to a second MDF line to consolidate its dominance in Western India. While the new capex will temporarily elevate net debt to approximately ₹650 crores by FY27, management expects internal accruals and improved asset utilization (shifting to dedicated thin/thick lines) to restore the Debt/EBITDA ratio to under 1x by FY28. Investors should monitor the stabilization of the HDF flooring line and the recovery of MDF margins to the guided 16% in the coming quarter.