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Yes Securities Report
Greenpanel Industries Ltd. registered a sluggish quarter wherein medium-density fiberboard volumes came in at 123,615 cubic meter, a decline of 2% YoY and increased by 7% QoQ.
Export volumes (27% of MDF volumes), increased by 24% YoY and 21% QoQ, the sequential growth was on account of unbilled inventory at port in previous quarter.
Domestic volumes (73% of MDF volumes), declined by 9% YoY and improved marginally by 2% QoQ. Blended average selling price contracted by 8.4% YoY and 2.4% QoQ due to price correction in export prices as compared to Q2 FY23 and higher contribution of exports in Q2 FY24 versus previous quarter.
Ebitda margins came in at 21.2% as compared to 30.4%/20.4% in Q2 FY23/Q1 FY24 respectively.
Hence, Ebitda/cbm stood at Rs 6,080 versus Rs 9,515/Rs 5,993 in Q2 FY23/Q1 FY24 respectively. Plywood volumes degrew sharply by 20% YoY and increased by 4% sequentially.
Ebitda margins contracted drastically to 1.6% from 7.3%/5.9% in Q2 FY23/Q1 FY24 respectively on account of higher timber cost and lower volumes.
Moreover, the prices of deco-veneer reduced during the quarter which further dented the margins.
Management steeply reduced their MDF volume growth guidance to 3-5%YoY for FY24 versus previous guidance of 13-15%. Ebitda margin guidance has also been lowered to 22-23% versus previous 23-25%.
For plywoods company expects to remain flattish on volume front. The commercial production of new MDF capacity has also been postponed to Q3 FY25 from Q1 FY25 due to delay in shipment from Germany.
We believe Greenpanel is likely witness multiple headwinds over FY23-FY25E in terms of-
softness in demand,
rising imports,
growing domestic competition and
rising input cost.
Hence, we do not foresee any major growth over FY23-FY25E, wherein we expect MDF volumes/value to grow by 11%/6% compound annual growth rate for MDF.
MDF margins are likely to decline to 20.5% by FY25E owing to contraction in realization with new low-grade product expected to constitute 25-30% of total volumes.
We have lowered our FY25E earning per share expectation by 12% and downgraded the stock to 'Neutral' from 'Add'.
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