Greenpanel Industries Ltd (GREENPANEL) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to Greenpanel Industries Limited Q2 FY '27 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing "*" then "0" on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Gavin Desa from CDR India. Thank you, and over to you, sir.
Gavin Desa (CDR India): Thank you, Nirav. Good day, everyone, and thank you for joining us on Greenpanel Industries Q2 and H1 FY '27 earnings conference call. We have with us today Mr. Shobhan Mittal, the Managing Director, and Mr. V. Venkatramani, the CFO. Before we begin, I would like to state that some statements made in today's discussion may be forward-looking in nature and may involve risk and uncertainties. A detailed statement in this regard is available in the results presentation, which was shared with you earlier. I would now like to invite Mr. Shobhan Mittal to begin the call. Over to you, Shobhan.
Shobhan Mittal (Greenpanel Industries Ltd): Thank you. Good evening, ladies and gentlemen, and welcome to our quarter two and first half earnings call for FY '27. Our endeavor continues to be towards enhancing our sales volume across categories and results of these initiatives are gradually becoming visible. On the retail front, volume growth remained strong both for MDF and ply, building on the momentum of quarter one.
Shobhan Mittal (Greenpanel Industries Ltd): sales made during Q2 were the highest ever for Greenpanel in a single quarter. Furthermore, if the pre-festive season picks up pickup is anything to go by, we look forward to a much improved third quarter and second half of the current fiscal. Our annual foreign scheme foreign trip scheme meet with our top 150 plus channel partners in Hong Kong and Macau in August has helped to further reinforce our connect with our partners and gives me confidence in our ability to further drive this growth as we enter the second half of the year. Price sensitive OEM segment was slow to respond initially, also due to price increases taken in quarter one. Many OEMs had made alternate import arrangements impact impact of which continued into Q2. But pricing realignment with major counter-part parties have been undertaken which has helped volume recovery month on month. Abnormal conditions in the Middle East continue to persist, impacting the availability of containers and vessels, leading to higher delivery cost for our end consumers. Export salience still grew month on month, despite further hikes in sea freight at the end of September. Our opening export order pipeline as of start of October is higher versus the total sales made during Q2, reflecting the increasing inclination of customers in the region to again view us to be their dependable partners so from both a price and volume perspective. The spiraling freight costs have also made imports a less feasible proposition for the domestic markets. Consequent to the late recovery in OEM sales and export sales remaining muted due to the geopolitical situation and sea freight challenges, despite retail sales growing 17% year-on-year, the total volume degrew by 3.4% while sequentially versus quarter one, growth was 23%. Plywood salience also remained strong, growing in by 8.4% year-on-year, while sequentially, the growth was 16.5% versus quarter one. The total revenue for quarter two FY '25 was 407 crores, which implies growth of 4.6% versus last year and 16.4% sequentially over quarter one FY '25. For the first half of year, our total revenues grew by 6.3% year-on-year to rupees 757 crores. Moving to expectations, the domestic demand drivers are intact. We expect 15% to 17% CAGR to continue for MDF. The recent implementation of Furniture Quality Control Order, 2025 is expected to further support growth of wood panel demand in the country. The QCO is now in place for more than six months. The transitional relief period provided for imports and the exemption period granted to MSMEs has also lapsed in quarter two. Large furniture makers have already commenced or announced fresh capacity additions to fill the potential vacuum created due to restrictions imposed by the QCO on import of substandard furniture. With a line 3 in Andhra already in operation, there's sufficient organic headroom available to Greenpanel to capitalize on this opportunity. We also expect the current supply- demand gap to reduce as well going forward. Cost inefficient multi-daylight lines are increasingly becoming unviable in the present pricing conditions. The pace of capacity additions hereon is also expected to moderate as well going forward. Imports, too, are no longer cheaper versus domestic supplies. Recent container freight increases has added to the complexity. Greenpanel will continue to drive on picking up relative market share. Greenpanel we are aiming to achieve mid-teen MDF for volume growth for the full year. Retail MDF business is expected to grow strong year-on-year, while we aim to recover the first half shortfall of OEM and MDF OEM and export MDF volumes during the balance half of the year. On the margin front, while pricing challenges are still impacting margins temporarily due to the current competitive pressures, chemical cost inflation is expected to moderate in the second half. While cost inefficiencies cost efficiencies and operating leverage advantage should play out as well with additional volumes to support margin expansion going forward. Additionally, we're focused on minimizing gaps and in inefficiencies enabling us to be leaner and better prepared to leverage our scale and capabilities. With this, I request our CFO Himanshu Jindal for the financial and other updates. Thank you.
Himanshu Jindal (Greenpanel Industries Ltd): Hi. Thank you, Shobhanji. Good evening, all. I am sure you have seen the numbers in our earnings presentation. There are a few points I would like to highlight. First on the margin front. While the prices were realigned to counter competition and gain market share, on the back of the softening of the chemical cost, our cost of production also reduced sequentially by 5%.
Himanshu Jindal (Greenpanel Industries Ltd): the full impact of the reduced cost is yet not visible on the quarter two results. A price reduction with the cost of goods staying a bit elevated optically is what led to margin contraction in quarter two. Some portion of this was obviously offset by the better fixed cost absorption sequentially given the passing volumes. As a result of this the consolidated operating EBITDA margin for the quarter was 7.5% versus 9.6% in quarter one and 10.2% last year. For the first half operating EBITDA margin improved though by 100 basis point to 8.4%. Second on the balance sheet front we continue to remain disciplined you know with working capital and leverage in check. The working capital cycle has improved by five days versus the 30th June numbers while the net debt has further reduced to Rupees 133 crores. We can open the questions open the floor for questions please. May I request the moderator to open the floor for questions please.
Moderator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press "*" and "1" on their touchtone telephone. If you wish to remove yourself from the question queue, you may press "*" and "2". Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press "*" and "1" to ask a question. First question is from line of Praveen Sahay from PL Capital. Please go ahead.
Praveen Sahay (PL Capital): Yeah, hi sir. Thank you for opportunity. My question is related to the domestic volume. As you had mentioned retail has done well, but still like OEM not picked up. So, can you you know give the reason for OEM volume impact and do you believe this OEM volume to improve in the rest of the year?
Shobhan Mittal (Greenpanel Industries Ltd): Yes, Praveen. So if you look you know year on year, quarter two last year, we had taken substantial corrective measures in terms of pricing to push OEM volumes. So, from quarter one of last year to quarter two, we had almost doubled our OEM volumes. So the base, quarter two last year was almost 28,000 cubic meters off. And then, you know, quarter one this year we took a substantial price increase. Any benefit that the OEMs were getting in terms of pricing was removed and they were bought at par to the to the retail price levels primarily on account of the you know, the war and the chemical costs going up. So, that did hamper the OEM volumes. And, you know, OEMs because they also do long-term planning, in case a supplier is no longer viable for them, so they did go ahead and place you know, orders for imports, etc., which has affected the Q2 volumes also. Going forward, of course, our hope and you know, strategy is to regain as much market share back from the OEMs. So, we are hoping quarter three to be a lot better than the quarter two numbers in terms of OEM volumes.
Praveen Sahay (PL Capital): And have you seen this reflection so far in October?
Shobhan Mittal (Greenpanel Industries Ltd): It's moving in that direction, I would say. It's not to the levels that we hope it hoped it to be, but it's moving in that direction.
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