Greenpanel Industries Ltd (NSE: GREENPANEL) Q3 2025 Earnings Call dated Feb. 06, 2025
Corporate Participants:
Shobhan Mittal — Managing Director
V. Venkatramani — Chief Financial Officer
Analysts:
Gavin Desa — Analyst
Parth Bhavsar — Analyst
Keshav Lahoti — Analyst
Shraddha Kapadia — Analyst
Utkarsh Nopany — Analyst
Shivkumar Prajapati — Analyst
Sneha Talreja — Analyst
Resha Mehta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Green Panel Industries Limited Q3FY25 earnings conference call. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing Star then zero on your touchstone phone.
I now hand the conference over to Mr. Gavin Deesa of CDR India. Thank you. And over to you, sir.
Gavin Desa — Analyst
Thank you Rayo and good day everyone and thank you for joining us on Green Panel Industries Limited Q3 and 9 month FY25 earnings call. We have with us today Mr. Shobha Mittal, the Managing Director and Mr. V. Venkatramani, the CFO. Before we begin, I would like to state that some statements related to these discussions may be forward looking in nature and may involve risks and uncertainties. A detailed statement in this regard is available in the result presentation that was sent to you earlier. I would now like to invite Mr. Shobha Mittal to begin the proceedings of the call. Over to you Shobha.
Shobhan Mittal — Managing Director
Thank you Gavin. Good afternoon everyone and thank you for joining us to discuss Green Panel’s operating and financial performance for Quarter 3 FY25 MDF. Domestic sales volume were flat year on year and grew by 11% quarter on quarter. Export volumes were lower by 7.6% year on year since we consciously stopped exports to those customers who were not prepared to compensate us for the steep increase in wood prices. India domestic realizations were lower by 5% year on year at rupees 29,867 cubic meters per cubic meter. Export realizations were higher by 2% year on year at rupees 19,479 per cubic meter.
India’s EBITDA margins at 5.1% were impacted by steep increase in wood prices. Plywood volumes were lower by 17% year on year. EBITDA margins at 3.1% were impacted by lower volumes. Plywood realizations at rupees 252 per square meter were higher by 1.2% year on year. Post tax profits for the quarter was lower by 75% at rupees 8.5 crores as compared to rupees 34.61 crores in corresponding quarter. For reasons mentioned earlier.
Net working capital at 36 days has shown an increase of 11 days year on year due to increase in wood inventories. Net Debt stands at Rupees 104crores as of 31st December 2024 inclusive of Rupees 219crores for the expansion project. Work is progressing on the expansion project and we estimate commercial production towards the end of quarter 4 FY25. Mr. Venkatramni will now run you through the financials in greater detail post which we will have a quick Q and A session. Thank you.
V. Venkatramani — Chief Financial Officer
Good afternoon everyone and thank you for joining us to discuss the FQ3FY25 financial performance of Green Panel Industries. Net sales during the quarter were lower by 7% at Rupees 358.12 crores compared to R 284.99 K during the corresponding period due to fall in domestic realizations and lower price volumes, NBA sales fell by 6% at R 325.9. And contributed 91% of the top line. NBF domestic volumes were flat year on year while export volumes were also lower due to pricing issues.
NBF domestic revenues were increased to 87.01 crores while exports contributed Rs. 38.92 crores. Domestic realizations were lower by 5.5% year on year at Rs. 29,867 per cubic meter and while export utilizations were higher by 2.2% at Rs. 19,479 per cubic acre. Blended NDF realizations were lower by 4.2% at Rs. 28,079 per cubic meter. Uttarshan NBS plant operated at 82% and Andhra plant operated at 58% with welded capacity utilization at 66%. Sales growth of 16.1% at rupees 32.19 crores.
Private sales volumes were lower by 16.9% at 1.28 million square meter and the unit operated at 44% during the quarter. Flu sales realizations were up by 1.2% at R262 per square meter. In Q3FY25 gross margins were lower by 1285 basis points year on year at 73.2% due to fall in domestic realizations by 5.5% year on Year and steep increase of 25% in wood prices year on year. EBITDA margins were down by 1229 basis points at 5% EBITDA in value terms to the rupees 17.78 crores and post tax profit at rupees 8.50 crores. For reasons mentioned earlier, that concludes my presentation.
We may now start the Q and A session. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press Star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and. Two participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press Star and one first question is from the line of Parth Pavsar from Investec. Please go ahead.
Parth Bhavsar
Hi, sir. So, thank you for the opportunity. So I believe. Sir, in your remarks you mentioned that this quarter was largely impacted by raw material cost and prices. Lower prices both in exports as well as. Domestic market. So wanted to understand what was the timber procurement cost both in north and south for the quarter and how do we see it going ahead?
V. Venkatramani
Okay, so timber procurement prices were rupees 7.15 per kg in North India and rupees 6.23 per kg in South India with blended rate of 6 point per kg for both the plants put together.
Parth Bhavsar
Okay sir, how do we see this going ahead? Is this the peak for us? Because there was a sudden jump, you know, on quarter, on quarter basis in raw material cost. So how do we see it going ahead?
V. Venkatramani
I would say we are probably towards the end of the cycle, but I wouldn’t completely rule out, you know, percentage points increase in the next couple of quarters.
Parth Bhavsar
Okay, okay. And so a few data points. What was the share of value added products during the quarter?
V. Venkatramani
It was 49% in volume terms and 61% in value terms.
Parth Bhavsar
Okay, sir, besides this, how is the competition been in the domestic market as well as, you know, the imports? So wanted to understand domestic markets are, you know, companies, you know, growing, going aggressive and you know, taking price cuts and even we are following the suit and imports or is it because of the impose the pressure because of imports since you know, BIS normally would, you know, kick in anytime and there’s a pressure from imports since, you know, everyone would want to sell it off, whatever the inventory is left.
V. Venkatramani
There was some pressure from imports. If you look at quarter two, we had imports of approximately 10,000 cubic meters per month during quarter two. And during quarter three it was between 20 to 22,000 cubic meters per month. So import pressure did increase in potency. And I think you rightly mentioned possibly because as far as domestic realizations are concerned, we have not taken any price cuts in the current quarter. But if you remember, we have taken a 4% price cut towards the middle of August. So you know, so part of that price cut impact happened in this quarter because you know, the previous quarter it was effective for only 45 days. So the full impact did not come in the previous quarter. So part of it was impacted during the current quarter.
Parth Bhavsar
Got it, got it, got it. So those. And one last question. What was the profitability for exports? Margin terms or whatever you can help me with.
V. Venkatramani
Because you know, volume of exports was very low. So we were only taking orders, you know, which making a positive contribution to the fixed cost.
Parth Bhavsar
Right. So if roughly any, any number, rough numbers as well would do.
V. Venkatramani
So the total exports for the porter were 19,978 cubic meters.
Parth Bhavsar
Right.
V. Venkatramani
So the realization is low because you know, majority of the consignments were on FOB basis. That is the trade cost was paid by the customer.
Parth Bhavsar
Okay, okay. And sir, profitability wise, EBITDA margins or something.
Operator
Sorry to interrupt but maybe request you to rejoin the queue as there are seven.
V. Venkatramani
Like I mentioned, it was in low single digits.
Parth Bhavsar
Okay, sir, done. Thank you.
Operator
Thank you. Before we take the next question, a request to participants to please limit your questions to two per participant. Should you have a follow up question, we request you to rejoin the queue. The next question is from Keshav Lahodi from HDFC Securities. Please go ahead.
Keshav Lahoti
Hi. Thank you for the opportunity. So firstly, want to understand the volume guidance which you have given earlier for H2 and FY26. Want to understand one more thing. You know, as you are very, you know, strong growth of 35% in FY26 because your new plant will be coming up. But is really capacity a constraint or demand is a challenge for you. So coming up with new capacity, whether we’ll speed up the growth rate of the company.
V. Venkatramani
Okay, so as far as the current year, I don’t think we’ll be able to meet the guidance which we had given in the last call. So I think at the moment our efforts are to ensure that we, you know, that domestic volumes at least reach the level which we did in. So that’s for the current year. And as for FY26, I think you will be targeting 8 to 10% volume growth on the existing capacities and capacity utilization of between 40 to 60% for the new plant.
Keshav Lahoti
Okay, got it. Sir, what is the outlook on the timber prices? So even if we take the exit rate of timber prices, whether the timber cost will increase in next quarter and what is the outlook for this
V. Venkatramani
As far as the consumption is concerned? You know, because there will be some. Inventory effect of the price rise which happened during the current quarter. So yeah, unless we see a significant fall in timber prices in February or March, I think consumption cost will be higher in Q4 as compared to quarter three.
Keshav Lahoti
Okay, so what sort of increase we should expect in Q4 15 but rather stay stable from here?
V. Venkatramani
Very difficult question because timber prices are volatile, like I mentioned during the opening comments that we have seen a 25% increase in wood prices year on year. So it’s very difficult to forecast that trend. And since the new crop comes around July, I think there could be some increase in wood prices, but it’s very difficult to forecast the trend.
Keshav Lahoti
Okay, got it. Gotcha. Thank you.
V. Venkatramani
Okay,
Operator
Thank you. Next question is from Shraddha Kaparia from Share India. Please go ahead.
Shraddha Kapadia
Thank you so much for the opportunity and I joined the call a bit league, so. So if there is any repetition then sorry, but I wanted to understand the major industry demand scenario also region wise, if we are seeing any green shoots which is visible and also in terms of the demand supply, if you could give a basic understanding about the same.
V. Venkatramani
Okay, so in terms of capacity, we are currently at about 4.2 million cubic meters. And if we add a capacity which is expected to be operational in Q4, we should be around 4.5 million cubic meters for the country as a whole in terms of capacities. And I expect that market demand will probably be somewhere between 2.7 to 2.8 million cubic meters for the current year. So there will still be a significant gap between supply and demand which will probably be bridge over the next.
Shraddha Kapadia
Okay, thank you so much. Also sir, any update on the BIS norms? Do we expect it to be implemented this month itself? And any updates?
V. Venkatramani
The date has been announced as 11 February and although there has been no official announcement recently, we expect it to be implemented from that date.
Shraddha Kapadia
Okay, sir. Okay sir. Thank you so much for the update.
V. Venkatramani
Thank you.
Operator
Thank you. Next question is from Utkarsh Nopani from Bob Capital Markets. Please go ahead.
Utkarsh Nopany
Yeah. Hi. Good evening sir. So my first question is on the pricing side. So what? We have seen that the rupee has weakened quite a lot in the past few weeks. So wanted to understand from you whether this is likely to help the industry to take some price hike in the current March quarter even in an oversupplied situation.
Shobhan Mittal
Yeah, yeah, I’ll take that. So you see, the only silver lining with the increased dollar cost is that imports are going to get more expensive. And the segment where that affects us the most is the OEM segment. And anyways, with the hope that the qco, the BIS norms come into place, imports will start getting restricted from February. So in that segment I think yes, there may be some opportunity for a price increase. But the retail segment primarily today pricing is sort of defined by the domestic competition. And the increase in the dollar rate was not going to affect the domestic competition, pricing or costing in any which manner. So at the moment I don’t see a possibility of price increase in the regular retail segment.
Utkarsh Nopany
Okay. And so what is the share of our OEM sales volume in December quarter?
Shobhan Mittal
You have the number?
V. Venkatramani
Yeah. Yes sir, it was 21% for the quarter.
Utkarsh Nopany
Okay.
V. Venkatramani
Domestic volume.
Utkarsh Nopany
Okay. And sir, lastly by when our MDF project is likely to be commissioned.
V. Venkatramani
To be commissioned in March.
Utkarsh Nopany
Okay, Thanks a lot sir.
Operator
Thank you. Next question is from Shivkumar Prajapati from Ambit Investment Advisors. Please go ahead.
Shivkumar Prajapati
Yeah. Am I audible?
Shobhan Mittal
Yes.
Shivkumar Prajapati
Yeah. Thanks for having my question. Excuse me, even I joined a bit late due to some technical issues. So my first question is how is the demand outlook in the US and Europe regions?
V. Venkatramani
The demand situation in Europe and US Because. We are not supplying to the to those markets. So our exports are primarily to the Middle east and you know, to the neighboring countries.
Shivkumar Prajapati
So. So the idea was to understand like once the US and Europe demand picks up, the Vietnamese and other Indonesian players supplying in India would start supplying to those regions. That’s the reason I quoted this question. So my next question is
Shobhan Mittal
The same because. Sorry, interrupting you. Not necessarily because, you know, transportation of plane boards is a challenge to Europe and us from Asia in general. So it’s not like the Thai or the Malaysians or the Vietnamese are dependent on these markets for the plane boards. Yes. If furniture exports increase, then the internal consumption will increase, that’s for sure. But it’s not going to affect the plain board exports.
Shivkumar Prajapati
Okay, my next question is the sales promotion expenses are quite low as compared to previous quarters. I think it’s just 0.7% this time. Like is my understanding correct or. Hello?
V. Venkatramani
Yes.
Shivkumar Prajapati
Yes. So the sales promotion expenses for this quarter seems quite low. It’s just 0.7% and earlier it was 2.2%. So it seems too low.
V. Venkatramani
Yes, demand conditions have been impacted. We have reduced our promotional expenditure during the current year.
Shivkumar Prajapati
Okay, sir, got it. Thank you.
Operator
Thank you. Next question is from Snehat Alreja from Nuvama. Please go ahead.
Sneha Talreja
Hi team. Thanks a lot for the opportunity. I’m sorry I’m a bit late due to some technical reason. Just wanted to gauge, you know, the reason for such a sharp drop in MDF margins. I overload timber prices going up. If all we could quantify that. Along with that, is there any other reason? Because of which margins have come down to around five odd percent.
V. Venkatramani
Yeah, So I would say there are three reasons. So first, there’s been a steep increase in timber prices. So quarter on quarter there’s been a 17% increase in wood prices primarily due to an increase of 22% in South. And year on year there’s been a 25% increase in wood prices. Secondly, we had. Introduced a new scheme towards the middle of August which had an impact of about 4% on realization. So that was only effective for a part of the quarter in quarter two. So the balance impact of that is reflected in this quarter.
And third, because of the increase in wood prices there’s been a significant increase in fuel cost which are also impacted by the monsoon because during the wedge period you require more good to get the necessary heat. And lastly in quarter two there were some one off items in the other income like insurance claim and interest on income tax refund. So the other income for this quarter is low by almost two and a half percent as compared to. So these are the primary reasons for the fall in the MDF margins.
Sneha Talreja
Understood sir. So secondly what I wanted to understand is we also have taken some price hikes which we had spoken about. When can we see the impact of that in terms of its realization growth and hemp sports margins?
V. Venkatramani
No, we have not taken any price increase or price cut in during the current quarter. So I think you know what was being said that some of the competition was planning for a price increase from around the 5th of November. But I don’t know whether it has been implemented or whether it has been implemented partially or fully. I’m not really aware of that.
Sneha Talreja
But are your schemes discount continuing? Understood sir. You mean quarter two, this discount will continuing, right? Quarter three?
V. Venkatramani
Yeah, it’s continuing in quarter three as well as in the current quarter four.
Sneha Talreja
Understood, that’s helpful. So thank you so much.
Operator
Thank you. Next question is from Resha Mehta from Green Edge Wealth. Please go ahead.
Resha Mehta
Yeah. Firstly, just a few clarifications. So one, as you said, the MDF imports in India on an average per month in Q3 were to the tune of 2020 2000, is that number correct?
V. Venkatramani
Between 20 to 20,000 to 22,000 per month.
Resha Mehta
And you would attribute this steep rise to any specific reason?
V. Venkatramani
I think one of the. I’m not aware of any specific reasons, but there’s a possibility that, you know, it could be because of the expectation of bias implementation from February. So it could be that, you know, OEM clients who are the primary importers, as talked about before BIS implementation, it also happened last year when BIS implementation was expected, that imports went up significantly just before BIS was expected to be implemented.
Resha Mehta
Right, right. And you know, on the NBF realizations. Right. So both, if we look at the domestic as well as the export realizations, they have declined quarter on quarter and the decline has been much more steeper on the export side. So what would be the reasons for decline in realizations in both domestic as well as export for mdf?
V. Venkatramani
Okay, exports, I think probably you might have joined a bit later. Exports, I explained this primary because most of the exports during the current quarter, I would say almost 80% of the exports during the current quarter were on FOB basis where the freight was paid by the customer. Hence our realizations were lower here as compared to earlier quarters. And on the domestic side, we had introduced a new 4% scheme for our dealers during the middle of August. So part of that impact is reflected in the current quarter.
Resha Mehta
But exports, we were always largely fob, Right. Or has there any.
V. Venkatramani
No, we were largely cnn.
Resha Mehta
Okay, okay, got it. And when was the last price hike taken in MDS in the domestic market?
V. Venkatramani
I think probably around November 22,
Resha Mehta
22,
V. Venkatramani
As far as I remember.
Resha Mehta
Okay, okay. And the reason for stocking high wood inventory would be it in anticipation of the rainy season or the further expectation in terms of the inflationary trends?
V. Venkatramani
Yeah, to some extent, the mountains. And also, you know, from January, you know, because the harvesting season starts. So, you know, there are not many lasers available to cut the trees because they are engaged in other activities like harvesting rice, et cetera. So there is a shortage of labor to cut trees. So hence we stock up because of the harvesting season.
Resha Mehta
But would it have anything to. Do with the inflationary expectations?
V. Venkatramani
Not really. Because overall we hardly keep about three weeks of wood inventory. And if you maintain too large an inventory, the wood also tends to crack and diffuse it in conditions.
Resha Mehta
Right, right. And the next question is on the ply segment. So, you know, for nine months we have seen a volume degrowth of almost 16%. So when is it that, you know, we stop seeing this kind of volume degrowth? Because I understand that, you know, we have, we have done some kind of restructuring in the ply segment. Right. And the other sub question to this is that, you know, the margins have been improving over the last two, three quarters. Right. So we’ve moved to a positive trajectory despite realizations being flattish and the utilization levels have also gone down. Right. So two questions here. When do we see some at least a volume degrowth stopping? And second, what is the reason for improvement in margins despite, you know, weak realizations and lower utilization?
V. Venkatramani
Yeah, the reason for the margin improvement is because we have been reducing the admin costs. So we are economizing on cost. That helps to improve the margins because there’s not been too much inflation in wood prices on the plywood side because a lot of wood imports are happening from Africa and wood prices have been relatively stable on the plywood side. Gross margins have remained stable. And it’s primarily because of low volumes that EBITDA margins have been significantly impacted. But some cost reductions have helped to, you know, improve the, improve the private margins to a very small extent.
Resha Mehta
And when do we see volume?
V. Venkatramani
Can you take the second part of the question? When do we expect to see improvement in volume?
Shobhan Mittal
Yeah, we’ve taken some very drastic measures and changes within the plywood business model. Initially, you know, there were internal changes within the sales team. Now we’re in the process of completely revamping our dealer and distribution network as well. Hence, it’s taking a longer period because we’re sort of consolidating the dealer base, appointing larger size dealers and distributors. So there have been major changes in the plywood business model and we’ve relooked at it as a completely fresh page. So I think that starting next financial year, we will start seeing the impact and the benefit of that. So for next year, we are hoping. Anywhere between 15 to 20% volume improvement, if not more,
Resha Mehta
Which is from Q1 onwards, right?
Shobhan Mittal
Yes.
Resha Mehta
And also, you know, we now have a common sales team across Plai and mdf. So are we seeing any synergies? Because, you know, actually one would expect that, you know, we should be able to penetrate more into our existing MDF dealers with a common sales team and at least, you know, start seeing some kind of. At least we should stop seeing volume decline. Right. So can you just.
Shobhan Mittal
So, you know, a lot of the Indian dealers are already sort of married to more sort of established plywood brands from before. So it’s a bit of a challenge to sort of convince them to move away and they don’t like to carry multiple brands in the same sort of segment. So where they might be my MDF dealer, they might already be associated with another branded company in the plywood segment. So it’s a bit of a challenge to convince them. But yes, we are trying to leverage our existing network to a large extent, you know, and convincing them. And that is why, you know, things are taking a bit longer than expected. But as I mentioned earlier, hopefully quarter one onwards, we will start seeing the gains in this.
Resha Mehta
Right. And as we all said that, you know, we’ve been consolidating our dealers here on the ply side. So any numbers that you would like to, you know, share here that, you know, we were at X dealers and now, you know, we have reduced to Y dealers or something of that?
Shobhan Mittal
No, I. I think it’s a bit too. It’ll be too premature to do that at this point of time. So we will have more clarity on that, you know, towards the end of the financial year as to where we stand. Many are in process, many are being reviewed.
Resha Mehta
Right, Right. All right, thank you so much.
Shobhan Mittal
Thank you.
Operator
Thank you. Before we take the next question, a reminder to participants that you may press Star and one to join the question queue. The next question is from Parth Mahavsar from investech. Please go ahead.
Parth Bhavsar
Yeah, hi, sir, thank you for the opportunity. Giving me the opportunity again, Sir. I have two sets of questions. One is like in, in Q3, where would the industry like? How. How has the industry grown? Any idea in the domestic market, A rough estimate?
V. Venkatramani
Do you have any idea?
Shobhan Mittal
Sorry, I couldn’t hear the question very clearly. Can you please repeat that?
V. Venkatramani
Yeah. Industry drilling. Yeah, October started off quite well, but since Diwali we are seeing a muted demand.
Parth Bhavsar
Okay, fair enough. And sir, when you mentioned that you know, your base capacity would grow at 8 to 10% and you look to, you know, operate the new capacity at 40, 45% utilization now sir, how we, you know, so obviously the 40, 45% utilization won’t directly, you know, come from quarter one. Right. It will gradually ramp up to 40, 45% in Q4 maybe. So what sort of, you know, what sort of profitability do you see for FY26 on, you know, EBITDA per CBM terms? Because there would be higher fixed cost in the first two quarter as well from the new for the new plant.
V. Venkatramani
Okay. I won’t give a guidance as to the margin but the new plant will help to improve the margin substantially because the incremental fixed cost will be very low. Apart from the power and fuel costs and some addition of manpower on the plant side, there is no significant increase in fixed cost for the new plant. So I think once we start the new plant and we achieve that capacity utilization of around 40%, I think we will see a significant improvement in the margin.
Parth Bhavsar
Okay. So sir, when do you expect this facility to break even? At what utilization would it roughly break even?
V. Venkatramani
I think it will definitely be great even. Even if you achieve a 40% capacity.
Parth Bhavsar
Okay, fair enough. Thank you so much, sir. Those are my questions.
Operator
Thank you. That was the last question in the queue. I would now like to hand the conference back to the management team for closing comments.
Shobhan Mittal
Thank you everyone for joining this call and we look forward to speaking to everyone again post the next quarter and at the end of the financial year. If anyone has any further questions, please feel free to reach out to us. Thank you.
V. Venkatramani
Thank you everyone and have a good day.
Operator
Thank you very much on behalf of Green Panel Industries Limited. That concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.