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Yes Securities Report
Though Q2 is a seasonally weak quarter, demand trajectory for woodpanel has been better in early part of Q2 FY24 versus Q1 FY24 wherein demand was tepid. However excessive rainfall in northern region, inflationary pressure and higher interest rates have dented the overall demand.
Higher timber prices have further impacted industry's performance. Manufacturers have taken price hikes to mitigate the rise in input cost but the same will be implemented with lag-impact.
We believe with expected pick-up in new home sales, woodpanel industry is likely to witness improvement in demand. With MDF gaining market acceptance, we believe the said segment will outperform the industry growth.
Near-terms headwinds such as higher domestic capacity and its impact on pricing and margins do persist but in the long-term, we continue to believe company's with multiple product portfolio will grow rapidly owing to structural uptick in real-estate cycle.
Hence leading manufacturers have committed for huge capex in coming two fiscal to cater the incremental growth.
We continue to prefer Greenply Industries Ltd. from the woodpanel segment owing to-
steady growth in plywood segment,
commencement of MDF units,
improvement in overall margins and
strengthening of balance sheet from hereon.
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