Greenpanel Industries Ltd

Rating action

• CARE Ratings (CareEdge) reaffirmed CARE A+/CARE A1+ bank facilities; outlook from Negative to Stable.
• Long/Short-term facilities increased to ₹160 crore from ₹120 crore.
• Long-term facilities ₹80 crore reaffirmed; outlook revised from Negative to Stable.
• Rating withdrawn for one RBI-regulated facility (non-fund-based) per Annexure-1.

Rationale

• Established domestic MDF leader with strong brand and extensive distribution.
• Surplus liquidity and robust capital structure despite recent debt-funded capex.
• Outlook revised to Stable due to four-quarter operating margin of 8-9%.
• Risks include low capacity utilisation and FX exposure from euro borrowings.
• Liquidity remains strong: ₹176 crore cash, ₹160 crore undrawn limits; ₹73 crore due FY27.
• Capex ramp-up in Andhra Pradesh commissioned March 2025; absorption of fixed overheads improves margins.
• Debt/PBILDT expected to improve below 1x; overall gearing ~0.27x.

Outlook & sensitivities

• Outlook: Stable for all ratings.
• Positive factors: volume-led TOI growth and margin expansion.
• Negative factors: sustained MDF price pressure or delayed project stabilisation increasing leverage.
• Material change since last rating: outlook from Negative to Stable; ratings reaffirmed.
• Liquidity remains strong with ample cash and undrawn limits.

Financial Performance

• Quarterly revenue: INR 350 crore, up 8.5% YoY.
• MDF volumes grew ~12% YoY; MDF revenues +8% YoY.
• Ply volumes +10.4% YoY; ply revenues +5% YoY.
• Consolidated EBITDA: INR 33.5 crore, 9.6% of revenues; excludes euro borrowing FX.
• MDF EBITDA margin: 10.3% in Q1 FY27 vs 4.4% YoY.
• Gross margin: 52.7% in Q1 FY27.
• Exports in Q1 FY27: zero; OEM demand degrew; domestic MDF volumes grew.
• Forex loss: INR 2.5 crore; ECB component INR 1.8 crore.

Operating Update

• MDF volumes grew 12% YoY; revenues grew 8% YoY.
• Ply volumes grew 10.4% YoY; revenues grew 5% YoY.
• Export flows expected to resume as Middle East normalizes over time.
• OEM share ~20–25%; retail ~75–80%.
• ASP increased ~7.4% due to OEM-to-retail mix shift.
• Pricing rollbacks by peers; market remains price-sensitive; exports limited this quarter.

Capex and Projects

• MDF capex planned: near-term capex largely maintenance; no new large capex in next 18–24 months.
• Plywood capex: plan to add machinery to raise production 30–40% with minimal investment.
• Maintenance shutdowns: 5–7 days this quarter; not a full 15-day shutdown.

Guidance and Outlook

• Guidance for full year withheld due to uncertainties; not in a position to provide long-term guidance.

Q&A Highlights

• Diversifying exports: exploring alternate markets; freight-volatility remains.
• OEM demand expected to recover this quarter; supply agreements being reestablished.
• Channel inventory: market on hand-to-mouth; partners hesitant to stock amid volatility.
• Raw-material volatility: chemical costs rising again; timber costs stable; monitor in real time.
• Domestic strategy: pricing aggressive to defend share; aim to regain industry leadership.
• June–July exports: very small quantities; Middle East exports unviable due to freight.

Risks and Watchpoints

• Raw-material price volatility and geopolitical risk in Middle East.
• Freight cost volatility impacting export competitiveness.
• Channel destocking compressing near-term volumes.
• Funding and capacity utilization dynamics across MDF and plywood.

Promoter-group reclassification

• Application dated August 11, 2026 filed with NSE and BSE for promoter-to-public reclassification.
• Outgoing promoter group members seeking reclassification include Rajesh Mittal; Karuna Mittal; Sanidhya Mittal.
• Additional entities listed: Rajesh Mittal & Sons HUF; RS Homcon Limited; Shakuntala Safeinvest Pvt. Ltd.; RKS Family Foundation.
• All identified holders currently hold Nil shares (0.00%).
• Outcome subject to regulatory approvals from NSE and BSE.

Meeting Details

• Date: August 11, 2026
• Type/Format: group conference call; virtual
• Purpose: discuss audited Q1 June 30, 2026 results
• Availability: audio recording uploaded on company website; transcript linked

Participants

• Key company participant: Company Secretary and Compliance Officer

Financial highlights

• Total income for quarter ended 30 Jun 2026: 51,241.85 Lakhs.
• Revenue from operations: 34,981.09 Lakhs.
• Other income: 16,260.76 Lakhs.
• Profit before tax: 213.19 Lakhs.
• Tax: earlier year impact (1,277.14); deferred tax 90.27.
• Total tax expense includes earlier year adjustments and deferred tax.
• Net profit after tax: 137.38 Lakhs.
• EPS (Basic/Diluted): 0.11 / 0.10.

Segment details

• Segment revenue from operations: Plywood 3,317.07; MDF 31,664.02; Total 34,981.09.
• Segment profit before tax: Plywood 172.46; MDF 3,630.00; Total 3,802.46.
• Finance costs: 558.24.
• Other unallocable expenditure net: 3,031.03.

Governance & notes

• Company has no subsidiaries, associates or joint ventures as on 30 June 2026.
• Operating segments: plywood and allied products; MDF and allied products.
• Promoter group reclassification approved; to Public shareholder category; subject to stock-exchange approvals.
• Board meeting started 1:00 PM, concluded 2:10 PM.
• Independent auditor's limited review completed; no material misstatement observed.

Business Overview

• Core business: MDF and plywood wood panels manufactured for the Indian market.
• Strategic emphasis on domestic sales and price realization to offset chemical costs.
• Zero export sales in Q1FY27 due to Middle East conflict.
• Brand and market-expansion initiatives include TV reach, trade publications, and Bharat Buildcon presence.

Operational Highlights

• MDF domestic volumes up 12% YoY; Retail up ~20%; OEM down ~14% YoY.
• Plywood volumes rise 10.4% YoY.
• MDF gross margin 52.7% (+570 bps YoY).
• MDF operating EBITDA 10.3% of sales; total operating EBITDA 9.6% of sales.
• Net debt reduced to ₹141 Cr from ₹156 Cr; CCC 42 days vs 38 days.

Financial Performance

• Revenue ₹349.9 Cr in Q1FY27; YoY +8.5%.
• Gross margin 52.7%.
• Reported EBITDA ₹32.5 Cr; PBT ₹2.1 Cr; PAT ₹1.2 Cr.
• Net debt ₹141 Cr; down ~₹15 Cr from Mar-2026.

Capital Structure & Liquidity

• ICRA reaffirmed working capital facilities at A+; liquidity remains comfortable to support growth.

Strategic Priorities & Outlook

• Pricing hikes implemented to offset rising chemical costs.
• Domestic market expansion supported by digital channels and a new website.
• New website launched: 25k visits, 59k page views; 2 lakh user events.
• Bharat Buildcon 2026 trade show highlighted innovations; ongoing market-reach expansion.
• Brand investments include national TV reach and trade publications.

Risks & Mitigation

• Export halt due to geopolitical tensions; mitigated by domestic sales growth.
• Chemical and timber cost volatility; addressed via price realisations and efficiency gains.

AGM details

• Date and time: August 7, 2026 at 11:00 AM via VC/OAVM.
• Mode: Video Conferencing/Other Audio-Visual Means.
• Voting record date: July 31, 2026.

Resolutions and outcomes

• Resolution 1 (Ord): Adoption of audited financial statements; approved.
• Resolution 2 (Ord): Dividend of ₹0.50 per share approved.
• Resolution 3 (Ord): Re-appointment of Shobhan Mittal; approved.
• Resolution 4 (Special): Alter AoA to remunerate independent directors beyond limit; approved.
• Resolution 5 (Special): Remuneration to independent directors up to ₹10 lakh; approved.

Voting highlights

• Res 3 had 25 votes against in Public Non-Institutions; otherwise unanimous.

Dividend details

• Dividend: ₹0.50 per share approved.

Directors and auditors

• Director changes: Shobhan Mittal re-appointed; retire by rotation.
• Auditors: No change disclosed.

Other approvals

• AoA amendment enabling remuneration to Independent Directors; approved.
• Independent director remuneration up to ₹10 lakh; approved.

AGM details

• AGM conducted via VC/OAVM; commenced in the morning and concluded in the early afternoon.

Key resolutions

• Item 1: Adopt audited financial statements and reports.
• Item 2: Declare dividend per equity share.
• Item 3: Re-appointment of director retiring by rotation.
• Item 4: Alter Articles of Association (special resolution).
• Item 5: Remuneration for independent directors (special resolution).
• Voting: E-voting conducted; results to be announced after scrutiny report.