Hold Greenpanel Industries: target of Rs 131: ICICI Securities

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Greenpanel Industries' MDF revenue grew 2.9% YoY in Q2FY27, but volumes declined 3.4% YoY due to a 32.3% YoY drop in exports to West Asia and flat domestic volumes.
  • The company's adjusted MDF operating profit margin (OPM) contracted 230bps YoY to 6.7% due to higher raw material costs and pricing challenges.
  • Management guides for mid-teen MDF volume growth in FY27 and double-digit volume growth in coming quarters, with a target of achieving double-digit EBITDA margins.
  • The company has no capex plans for MDF in the next 18-24 months, focusing on better capacity utilization and a small capex for plywood.

Thesis Validation Checklist

  • Investors should watch for signs of volume improvement, particularly in domestic MDF sales, and progress towards achieving double-digit EBITDA margins.
  • Monitor the company's ability to navigate intense competition, manage raw material costs, and improve operating leverage.
  • Keep an eye on industry trends, including the impact of new capacity additions and potential oversupply in the domestic MDF market.
  • Track the company's working capital management, debt reduction, and return on equity (RoE) to gauge its financial health.