Greenply Industries posts strong Q1 FY27 growth as MDF margins and expansion support outlook

Investment View and Valuation

Anand Rathi Research retained its BUY rating on Greenply Industries following a stronger-than-estimated Q1 FY27 operating performance and a positive management outlook across plywood and MDF. The broker raised its target price to Rs 375 from Rs 350, using an unchanged valuation multiple of 22 times FY28E EPS.

The broker estimates an EPS CAGR of 44.5 per cent over FY26-FY28E and expects RoE to improve from 11.8 per cent in FY26 to 18.2 per cent in FY28E. Greenply is valued at 22.2 times FY27E EPS and 17.8 times FY28E EPS, compared with its five-year average P/E of 28.3 times.

Q1 FY27 Financial Performance

Greenply reported consolidated Q1 FY27 operating income of Rs 7,249 million, an increase of 20.7 per cent year on year. EBITDA rose 27.1 per cent to Rs 783 million, while adjusted PAT increased 50.6 per cent to Rs 376 million.

EBITDA margin expanded 55 basis points year on year to 10.8 per cent, although it declined 121 basis points sequentially from Q4 FY26. EBITDA was 6 per cent above Anand Rathi’s estimate, supported by better volume growth and MDF margins.

Segment Performance

Plywood

Plywood revenue increased 17.0 per cent year on year to Rs 5,311 million. Volume rose 13.5 per cent to 19.4 million square metres, while realisation increased 5.2 per cent sequentially to Rs 271 per square metre.

Plywood EBITDA grew 23.6 per cent year on year to Rs 445 million, and the EBITDA margin expanded 45 basis points year on year to 8.4 per cent. Margin improvement was supported by a 130-basis-point reduction in brand spending to 2.8 per cent of plywood revenue, despite a 49-basis-point decline in gross margin.

Management attributed volume growth to improved product quality, supply-chain changes and a greater focus on the mid-premium Ecotech brand. However, labour availability during the April-May 2026 elections and outsourcing material sourcing constrained growth.

MDF

MDF revenue rose 32.8 per cent year on year to Rs 1,957 million. Volume increased 24.7 per cent to 57,805 CBM, while realisation rose 11.1 per cent sequentially to Rs 33,849 per CBM.

MDF segment EBITDA increased 30.4 per cent year on year to Rs 339 million. The MDF EBITDA margin improved 34 basis points sequentially to 17.3 per cent, compared with Anand Rathi’s estimate of 16 per cent. Existing MDF capacity utilisation was 77 per cent in Q1 FY27. Management targets full utilisation in FY27 and sees utilisation potential of 80-82 per cent.

Management Outlook and Operating Guidance

• FY27 volume-growth guidance remains at 10 per cent for plywood and 25-30 per cent for MDF.
• Management expects sustainable plywood EBITDA margin above 10 per cent when quarterly plywood revenue exceeds Rs 6 billion.
• Sustainable MDF EBITDA margin is expected at 16-17 per cent, with a possible additional 1 per cent after the new MDF line starts.
• Imported chemical costs moderated in the latter half of Q1, but prices had started rising again in July 2026 because of higher crude oil prices.
• Timber prices were stable and are expected to remain stable in the near term.

Capacity Expansion and Capex

Greenply maintained its FY27 capex guidance at Rs 4.5-5.0 billion.

• The Odisha greenfield plywood plant, with capacity of 13.5 million square metres and capex of Rs 1.3 billion, is targeted for completion in Q4 FY27E.
• The brownfield MDF expansion will increase capacity from 300,000 CBM to 510,000 CBM. The project involves capex of Rs 4.25 billion and is expected to be completed by Q2 FY28E.
• Management expects MDF RoCE of 17-18 per cent after the second line is commissioned.

Furniture Fittings Joint Venture

The 50 per cent furniture fittings joint venture reported a reduced loss share of Rs 57 million. It remains loss-making because of costly imports and Chinese competition. Management expects the venture to breakeven around mid-FY28 and become profitable in FY29 after Phase II.

Key Risks

• Loss of market share in plywood or MDF.
• Delays in execution of new projects.
• Substantial escalation in growth-capex costs.