Greenply Industries capacity expansion and MDF growth strengthen earnings trajectory

Investment View and Target Price

Choice Institutional Equities retains a BUY rating on Greenply Industries Ltd. and raises its target price to Rs 400 per share from Rs 355. The positive view is based on accelerating capacity expansion, sustained volume-growth momentum, market-share gains and a strengthening market footprint.

Choice expects consolidated revenue, EBITDA and adjusted PAT to grow at compound annual growth rates of 16.3 per cent, 23.8 per cent and 32.1 per cent, respectively, over FY26 to FY29E.

The broker values Greenply using a price-to-earnings framework, applying a 22 times FY28E core EPS multiple to estimated core EPS of Rs 18.5, compared with the earlier multiple of 20 times. Choice considers the implied target-price PEG ratio of approximately 1.2 times reasonable and sees scope for further re-rating as earnings visibility improves.

Q1 FY27 Financial Performance

Greenply reported consolidated Q1 FY27 revenue of Rs 7,249 million, representing year-on-year growth of 20.7 per cent, although revenue declined 6.6 per cent quarter on quarter and was 2.0 per cent below Choice’s estimate of Rs 7,396 million.

EBITDA increased 27.1 per cent year on year to Rs 783 million, but declined 16.0 per cent quarter on quarter. The EBITDA margin was 10.8 per cent, flat year on year and 121 basis points lower quarter on quarter, while remaining 55 basis points above Choice’s 10.3 per cent forecast.

Reported PAT rose 32.0 per cent year on year and 21.1 per cent quarter on quarter to approximately Rs 380 million. The increase was aided by higher operating efficiency and the absence of the Rs 151.6 million exceptional loss recorded in Q4 FY26. PAT was 2.7 per cent above Choice’s estimate.

Plywood Segment: Volume Growth and Margin Recovery

The plywood segment reported Q1 FY27 volume of 19.4 million square metres, up 13.5 per cent year on year but down 14.9 per cent quarter on quarter. Realisation increased 3.9 per cent year on year and 4.3 per cent quarter on quarter to Rs 265 per square metre, ahead of Choice’s estimate of Rs 254 per square metre.

Plywood revenue rose 16.0 per cent year on year to Rs 5,266 million, including Rs 134 million of revenue from other related products. The segment EBITDA margin was 8.4 per cent, below Choice’s estimate of 9.0 per cent.

Management attributed the lower plywood utilisation and profitability to labour shortages and elections, but expects revenue growth and margin recovery from Q2 FY27 as utilisation normalises. It reiterated FY27 plywood volume growth guidance of 10 per cent and EBITDA margin guidance of 10 per cent, with confidence in achieving the margin target once quarterly revenue exceeds Rs 6,000 million.

A 3 to 5 per cent plywood price increase was implemented in Q1 FY27. Control Tech manufacturing is expected to improve finish, reduce material wastage and optimise manpower costs.

MDF Growth and Capacity Expansion

MDF was the key growth driver in Q1 FY27. Volume increased 24.7 per cent year on year and revenue rose 31.6 per cent, supported by higher volume, improved realisation and the new flooring line.

Management implemented a 7 to 9 per cent MDF price increase, resulting in approximately 10 per cent year-on-year growth in realisation. It guides for FY27 MDF volume growth of 25 to 30 per cent and an EBITDA margin of 16 to 17 per cent, with potential margin improvement to about 18 per cent after new capacity ramps up.

The new MDF flooring line began commercial production on July 20, 2026, and has peak revenue potential of Rs 750 to 800 million. Management expects MDF capacity utilisation to remain around 80 to 82 per cent even after the Vadodara plant starts operations.

Growth Outlook and Joint Venture Progress

Choice forecasts plywood volume and realisation to grow at compound annual growth rates of 9.5 per cent and 2.0 per cent, respectively, over FY26 to FY29E. This implies plywood growth above the broker’s approximately 7 per cent industry-growth forecast. MDF volume and realisation are forecast to grow at compound annual growth rates of 20.0 per cent and 3.0 per cent, respectively.

Choice expects contribution from the BV Samet furniture-hardware joint venture from FY27. Domestic sales in the Greenply Samet joint venture nearly doubled year on year. Local manufacturing expansion is expected by FY27-end or the beginning of FY28, and management expects the joint venture to break even by mid-FY28E.

Greenply added 127 dealers in Q1 FY27, taking its active dealer count to 686.

Capital Expenditure and Balance Sheet

FY27 consolidated capex is estimated at Rs 5,000 million. Management expects peak debt of Rs 7,100 to 7,300 million after capex, before debt declines. Net debt stood at Rs 5,330 million, with debt to equity at 0.57 times.

Key Risks

• A slowdown in real estate and home-improvement activity.
• Potentially higher timber costs.