Greenply Industries Ltd Q2 FY2026 Concall Summary

Key Takeaways

• Plywood volume up 7%, but margin target missed: Volume grew on BIS tailwinds and consulting-led improvements, yet the 10% EBITDA margin goal slipped because the required 10%+ volume growth did not materialize.
• MDF margin crushed by a one-off shutdown: Expansion from 800 to 1,000 CBM/day took the plant offline for over 40 days, triggering inventory liquidation, overhead under-absorption, and a margin drop to 8.3%. Management calls this temporary and guides 16% in H2.
• H2 hinges on volume acceleration and raw material relief: Management is confident of double-digit volume growth in both plywood and MDF, with raw material prices perceived to soften by late Q3 or Q4, offering incremental margin accretion.
• Samet JV losses stay high, profitability is a FY28 story: High import content (45-50%) keeps losses elevated; the path to breakeven runs through Phase 2/3 local manufacturing, with revenue targeted at ₹100 cr in FY27 and profitability the year after.
• What to watch next quarter: Whether plywood volume growth crosses 10% (the threshold for margin recovery), MDF margins rebound toward the promised 16%, and raw material prices actually soften as perceived.

Plywood: Volume Up, Margin Promise Deferred

• Volume growth of 7% came despite residential real estate degrowth in Q1 and Q2, aided by BIS implementation helping the organized trade and a 12-15 month consulting engagement now delivering supply chain and sales improvements.
• Realization fell 3.5% YoY to ₹242 per square meter as demand tilted toward mid-value segments, a mix shift that diluted the revenue benefit of volume growth.
• Core EBITDA margin improved 30 bps QoQ to 8.2%, but the 10% target was missed because that target is linked to 10%+ volume growth, which did not arrive.
• H2 confidence is high but conditional: management is "very comfortable" that double-digit volume growth is doable, yet it declined to promise 10% EBITDA, saying that threshold requires growth exceeding 15% for H2.
• Raw material prices are perceived to soften by end of Q3 or in Q4; if that materializes, it provides incremental margin accretion on top of operating leverage.
• Process investments continue: a new innovation line is being installed, additional capex for line balancing is underway, and the Ecotec brand is receiving significant marketing investment with the new "Kaam Sahi. Daam Sahi." campaign.

Manoj Tulsian: "10% may or may not happen. But at this point of time, for sure, we don't want to promise 10%. Yes, if we get very good growth, if we get a growth which is more than 15% for H2, then for sure, our internal working says that we can even touch 10% plus margin for H2."

MDF: A One-Off Quarter, A Sharp H2 Rebound Promised

• Q2 margin of 8.3% was a one-off driven by the capacity expansion shutdown. Three factors combined: finished goods inventory reduction caused under-absorption of overheads, non-moving and slow-moving inventory was liquidated at higher discounts, and outsourced material was consumed to balance market needs.
• The shutdown lasted over 40 days versus the planned one month, and the plant took additional time to stabilize after restarting. B-grade production (roughly 1% of output) and unique sizes that had piled up over six months were cleared during this window.
• Capacity now stands at 1,000 CBM/day, up from 800, and management expects to quickly utilize the entire expanded capacity. With fixed costs largely unchanged, the 25% capacity increase should deliver operating efficiencies.
• Realization is under pressure from competitors with large capacities undercutting prices, particularly in industrial and interior-grade segments, which make up an estimated 35-40% of volumes. Resin costs are also up due to tight competition.
• H2 margin guidance of 16% is maintained, supported by higher output absorbing fixed costs, liquidation of distressed inventory now behind, and double-digit volume growth expected. Full-year FY26 MDF margin is guided at approximately 14.5-15%.
• Next expansion needed by FY28: location and machine supplier to be finalized in the next 5-6 months, with the decision between the existing site and Odisha still open.

Sanidhya Mittal: "So whatever we were displaying or speaking about in Q1, I think we are maintaining the same. Obviously, Q2 was a one-off quarter because we originally shut down the plant for a month, but we took more than 40 days to actually get it up and running again."

BIS Implementation: Early Innings, Structural Tailwind

• BIS implementation is a continuous process, not a one-time event. Management believes there are "miles to travel" before nationwide compliance, but initial signs are encouraging and the shift is already helping the organized trade gain share.
• Lower imports are a direct consequence, and this, combined with stable raw material prices and better controls from the consulting engagement, forms the basis for plywood's H2 volume optimism.
• The consulting firm engagement, now 12-15 months in, is showing results in supply chain, production availability, and sales initiatives, with benefits becoming visible from the last quarter.

Manoj Tulsian: "It's a continuous process. So it's not like something that it's been done across the country and everyone has become BIS compliant. We think it's still miles to travel, but the initial signs are very good, encouraging."

Samet JV: Losses Persist, Local Manufacturing Is the Pivot

• Losses remain high because 45-50% of the product is imported, compressing margins. The JV is adding dealers incrementally each month and expanding the sales team, but started lean and thin.
• The margin profile changes significantly only when Phase 2 and Phase 3 expansion bring manufacturing to India, reducing import dependence. Until then, losses will continue.
• FY27 target: ₹100 crore revenue, with a monthly run-rate of approximately ₹5 crore in H2 FY26. Break-even and profitability are expected in the subsequent year, implying FY28.

New Initiatives: HDF Flooring, Odisha, and Brand Architecture

• HDF flooring: machine is fully installed, trials are ongoing, and samples and displays are being prepared. Commercial sales are expected to begin in early December. Capex is described as "very small" and capacity details were not disclosed.
• Odisha plant is now in construction mode, with balance capex to be spent in FY27 alongside maintenance capex. No other major capex is planned for FY27.
• PVC plant investment is planned, but management is not considering any new product categories for the next 9-12 months.
• Three-brand communication strategy now covers the premium Greenply range, the value-focused Ecotec brand (with its new "Kaam Sahi. Daam Sahi." campaign), and the growing MDF category, where advertising has commenced to build stronger awareness.
• Middle East exposure continues to reduce: guarantees down from USD 0.38 crore to USD 0.27 crore, and contingent liability decreased from ₹32 crore to ₹24 crore.

Sanidhya Mittal: "Early December, I think we should start selling commercially."

Balance Sheet & Working Capital

• Debt-equity ratio is confidently expected to remain around 0.5x despite further capex in H2, with net debt reducing through liquidation of excess inventory starting from Q2.
• Debtors increased partly due to higher sales versus Q1, but overdue status is not significantly up between Q1 and Q2. Management is targeting a reduction in overdues in Q3 and Q4, with some working capital release planned internally.
• Marketing spend is elevated, with investments continuing on both the Ecotec brand and the premium Greenply brand, plus the furniture and fitting JV requiring significant brand-building investment in its initial period.

Guidance & Commitments

Key Metrics