From timber troubles to thin MDF: What Greenpanel's FY25 results signal for investors

Indian Express

4 days ago

For many retail investors, Greenpanel Industries has been a familiar name on the stock ticker, one that once rode a strong uptrend.
After listing in 2019, the company's share price steadily climbed, peaking above Rs 600 in mid-2022, supported by a wave of optimism around India's growing furniture and interior markets.
Investors bet big on Greenpanel's leadership in medium-density fibreboard (MDF) and its vision to modernise the wood panel industry.
However, as the stock price chart shows, the journey since then has been bumpy. Rising timber costs, intense competition, and shifting regulations took the shine off, pushing the stock below Rs 250 earlier this year before a mild recovery toward Rs 300 levels today.
Against this backdrop, Greenpanel's FY25 results come at a crucial time.
The company is transitioning: scaling up a new thin MDF capacity, navigating reduced imports, and preparing for stricter quality norms under BIS standards from 2026.
While headline numbers show weaker volumes and lower profits, the story lies in how Greenpanel is positioning itself for the next growth phase and whether the recent stock rebound has further legs or remains fragile.
Business and financial performance: Detailed breakdown
Greenpanel Industries has two main revenue segments: MDF and plywood. Among these, MDF contributes about 90 per cent of the total revenue and remains the foundation of the company's business strategy. Plywood, though smaller, offers additional diversification.
MDF segment: The core business facing headwinds
MDF is Greenpanel's most important business, but it faced significant challenges in FY25.
Overall, MDF sales volumes dropped by about 10 per cent compared to FY24. The decline was mainly because the company stopped selling lower-grade commercial MDF in anticipation of new Bureau of Indian Standards (BIS) quality regulations that will become mandatory from February 2026.
In the fourth quarter alone, there were no sales of commercial-grade MDF, whereas the same quarter last year had about 41,000 cubic metres from this category.
At the same time, exports of MDF increased by 17 per cent for the full year and by 34 per cent in the fourth quarter. However, export sales come at lower realisations than domestic sales.
In Q4 FY25, export realisations were around Rs 22,400 per cubic metre, while domestic realisations were approximately Rs 31,200 per cubic metre. This difference in price impacted overall blended realisations.
The overall revenue from MDF in FY25 fell to Rs 1,260 crore from Rs 1,400 crore in FY24, a decline of about 10 per cent. More importantly, the MDF segment's profit before interest and tax (EBIT) margin dropped sharply to 5.8 per cent in FY25 from 14.2 per cent in FY24.
A key reason for the margin pressure was a nearly 23 per cent increase in timber prices during the year. Higher raw material costs combined with lower volumes and realisations created a difficult environment for the MDF segment. The company also received a one-time EPCG (Export Promotion Capital Goods) incentive of Rs 35 crore, which provided temporary support to margins. Without this incentive, segment profitability would have been even weaker.
Plywood segment: Small but steadier
The plywood business recorded a 15 per cent decline in volumes during FY25. Revenue also fell by about 17 per cent to Rs 135 crore compared to Rs 162 crore in FY24. However, average realisations improved by about 8 per cent in the fourth quarter, which helped offset some of the volume loss.
Segment profit margin (EBITDA) increased to about 4 per cent in FY25, up from negative 1 per cent the previous year. This improvement came from disciplined cost management and the write-back of provisions for turnover discounts at the year-end. The company focused more on profitability rather than chasing higher volumes in this segment.
Debt position and working capital analysis
Net debt stood at Rs 165 crore at the end of FY25. This includes Rs 36 crore of debt related to the new thin MDF capacity expansion at Andhra Pradesh. Net working capital days increased to 36 from 28 in FY24, reflecting higher inventory and slower movement of goods in a challenging market environment. Depreciation charges were around Rs 100-102 crore, consistent with new plant additions.
Strategic capacity expansion: Thin MDF line
One of the most important strategic steps in FY25 was the commissioning of the new thin MDF line in Andhra Pradesh. This new capacity focuses on thinner panels (1.5-5.5 mm), which are widely used in furniture and interior applications. Previously, a large part of the thin MDF demand in India was met by imports, which had higher logistical costs and were affected by recent policy changes.
For FY26, the company expects about 72,000 to 84,000 cubic metres of production from this new line. Management also expects around 10-12 per cent volume growth from the existing MDF plants. Combining these, Greenpanel is targeting a nearly 30 per cent increase in MDF volumes in FY26.
This new capacity gives Greenpanel the opportunity to capture demand that was earlier served by imports. It also strengthens the company's product mix by adding higher value products and helps reduce dependence on low-margin exports. This move is expected to improve scale and profitability gradually as utilisation ramps up.
Outlook and conclusion
Greenpanel enters FY26 at a crucial point.
After a tough FY25, the company aims to recover through volume growth and better margins. Management expects around 30 per cent growth in MDF volumes, driven by higher output from existing lines and the ramp-up of the new thin MDF plant.
Margins are expected to stabilise around 12 per cent for MDF and 7-8 per cent for plywood, supported by an expected decline in timber prices by about 5-7 per cent. The BIS quality standards set to come into effect in 2026 will likely benefit organised players like Greenpanel, as smaller and unorganised producers struggle to meet compliance.
Financially, the balance sheet remains moderate despite higher net debt at Rs 165 crore due to expansion. With major capital expenditure largely completed, the company plans to focus on improving utilisation and cash flows.
Key risks include strong price competition, delays in the new line ramp-up, and unexpected swings in timber prices.
In short, FY26 will be a test of execution. If Greenpanel manages to meet its growth and margin targets, it could start regaining investor confidence. The next few quarters will be important for investors to watch closely.
Note: This article relies on data from annual and industry reports. We have used our assumptions for forecasting.
Parth Parikh has over a decade of experience in finance and research and currently heads the growth and content vertical at Finsire. He holds an FRM Charter and an MBA in Finance from Narsee Monjee Institute of Management Studies.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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