Greenply Industries capacity expansion and faster MDF growth support margin expansion

Investment View and Valuation

In its July 27, 2026 result update, ICICI Direct Research retained its BUY view on Greenply Industries, citing sustained growth in plywood and MDF, capacity additions and the prospect of margin expansion. The broker revised its target price to Rs 340, based on 23x FY28E P/E, compared with the CMP of Rs 294.

ICICI Direct forecasts consolidated revenue growth of 12.8 per cent in FY27E and 11.5 per cent in FY28E, supported by plywood and MDF expansion.

Q1FY27 Financial Performance

Greenply Industries reported consolidated net sales of Rs 724.9 crore in Q1FY27, up 20.7 per cent year on year but down 6.6 per cent sequentially. EBITDA rose 27.1 per cent year on year to Rs 78.3 crore, while the EBITDA margin improved 55 basis points year on year to 10.8 per cent. However, the margin declined 121 basis points sequentially. PAT increased 32.3 per cent year on year to Rs 37.6 crore.

The quarterly profit included a Rs 5.7 crore share of loss from the Greenply Samet joint venture.

Segment Performance

Plywood

Plywood revenue was Rs 513.2 crore in Q1FY27, up 17.3 per cent year on year. Plywood volume increased 12.8 per cent to 19.4 MSM and realisation rose 3.9 per cent to Rs 265 per square metre. Core plywood EBITDA grew 23.5 per cent to Rs 44.5 crore, while the margin improved by around 50 basis points year on year to 8.4 per cent.

Sequential plywood margin declined by 200 basis points because of lower capacity utilisation and weaker operating leverage.

MDF

MDF revenue was Rs 193.8 crore, up 31.6 per cent year on year. Volume increased 24.7 per cent to 57,805 CBM and realisation rose 5.5 per cent to Rs 33,525 per CBM. MDF core EBITDA rose 32.2 per cent to Rs 33.9 crore, although the margin slipped 10 basis points to 17.3 per cent.

Growth and Margin Outlook

Management reaffirmed FY27 volume-growth targets of 10 per cent for plywood and 25-30 per cent for MDF, supported by distribution expansion and higher utilisation. It expects margins in both segments to improve through pricing actions and operating leverage.

Management has guided for a plywood EBITDA margin of 10 per cent and an MDF EBITDA margin of 16-17 per cent. It indicated that plywood margin can exceed 10 per cent once segment revenue consistently exceeds Rs 600 crore.

ICICI Direct estimates consolidated EBITDA margins of 10.9 per cent in FY27E and 11.3 per cent in FY28E, as higher-margin MDF grows faster. The broker expects plywood revenue to reach about Rs 2,513 crore and MDF revenue about Rs 893 crore by FY28E, representing CAGRs of 10.1 per cent and 18.6 per cent, respectively, from FY26.

Capacity Expansion and Capex

Greenply is progressing with an approximately Rs 500 crore capex programme, comprising:

• Rs 300 crore for MDF expansion at Vadodara;
• Rs 100 crore for a greenfield plywood facility in Odisha;
• Rs 47 crore for technology upgrades; and
• Funding for the Samet joint venture.

Commercial production at the new flooring manufacturing line commenced on July 20, 2026. The company is deploying ContiRoll continuous assembly technology, with two plants live and two expected in FY27, to improve precision, material utilisation and manpower efficiency.

Management expects debt-to-equity to peak at 0.7x during capex and moderate to 0.5x-0.6x after commissioning as operating cash flow improves.

Input Costs and Working Capital

Input-cost pressure from higher imported chemical prices led to industry price increases, although costs moderated during the second half of Q1FY27. Effective price increases were approximately 7-9 per cent in MDF and 3-5 per cent in plywood.

Working-capital days improved by 16 days year on year to 42 days.

Greenply Samet Joint Venture

The Samet joint venture remains loss-making owing to low utilisation, Chinese-import competition and high import costs from Rome. Management does not expect near-term profitability.

Key Risks

• A slowdown in demand.
• A spike in resin and other input costs.