Greenlam Industries Limited Q2 FY27 Earnings Conference Call

Management Participants

  • Mr. Saurabh Mittal – Managing Director and Chief Executive Officer
  • Mr. Ashok Sharma – Chief Financial Officer
  • Mr. Samarth Agarwal – Vice President, Finance

Q2 FY27 Consolidated Financial Performance

  • Net revenue grew 8% year-on-year (YoY) to INR875 crores
  • Sequential revenue growth of 10% from Q1 FY27
  • Gross margin declined 310 basis points YoY to 51.5% (140 basis points decline sequentially)
  • EBITDA margin before forex fluctuations declined 330 basis points YoY to 9.9%
  • EBITDA declined 19% YoY to INR87 crores in absolute terms
  • Net profit stood at INR24.5 crores

H1 FY27 Consolidated Financial Performance

  • Net revenue grew 13% YoY to INR1,672 crores
  • Gross margin declined 170 basis points YoY to 52.2%
  • Gross profit grew 9% YoY to INR872 crores
  • EBITDA margin before forex fluctuation declined 90 basis points YoY to 10%
  • EBITDA grew 4% YoY to INR168 crores in absolute terms
  • Net profit stood at INR46 crores

Segmental Performance - Q2 FY27

Laminates and Allied Segment:

  • Revenue remained flat YoY at INR658 crores
  • EBITDA margin before forex fluctuation stood at 12%, declining 590 basis points YoY
  • Production volume: 4.83 million sheets at 79% utilization
  • Sales volume: 5.09 million sheets, lower by 12% YoY primarily due to export challenges
  • Average realization: INR1,241 per sheet, growth of 12% YoY

Plywood and Allied Segment (includes plywood, decorative veneer, Engineered Floors, and Engineered Doors):

  • Revenue grew 7.5% YoY to INR110 crores
  • EBITDA loss before forex fluctuation narrowed to INR1.4 crores
  • Plywood production volume: 2.15 million square meters at 46% utilization
  • Plywood sales volume: 1.94 million square meters, growth of 23% YoY
  • Average realization: INR257 per square meter, growth of 4% YoY

Panel and Allied Segment (chipboard):

  • Revenue grew 124% YoY to INR107 crores
  • EBITDA before forex fluctuation turned positive at INR9 crores (second consecutive profitable quarter)
  • Production volume: 44,241 cubic meters at 61% utilization
  • Sales volume: 46,871 cubic meters, growth of 78% YoY
  • Average realization: INR22,591 per cubic meter, improvement of 24% YoY

Segmental Performance - H1 FY27

Laminates and Allied:

  • Revenue grew 3% YoY to INR1,254 crores
  • EBITDA margin before forex fluctuation stood at 12.9%, declining 290 basis points YoY
  • Production volume: 9.73 million sheets at 79% utilization
  • Sales volume: 9.72 million sheets, lower by 11% YoY
  • Average realization: INR1,240 per sheet, growth of 14% YoY

Plywood and Allied:

  • Revenue grew 13.5% YoY to INR216 crores
  • EBITDA loss before forex fluctuation narrowed to INR6.6 crores
  • Plywood production volume: 3.98 million square meters at 42% utilization
  • Plywood sales volume: 3.6 million square meters, growth of 22% YoY
  • Average realization: INR264 per square meter, growth of 4% YoY

Panel and Allied:

  • Revenue grew 156% YoY to INR202 crores
  • EBITDA before forex fluctuation: INR12 crores
  • Production volume: 89,079 cubic meters at 61% utilization
  • Sales volume: 88,289 cubic meters, growth of 116% YoY
  • Average realization: INR22,673 per cubic meter, growth of 18% YoY

Balance Sheet and Capital Structure

  • Working capital cycle improved by 3 days to 53 days compared to Q1 FY27 (56 days)
  • Net debt as of September 30, 2026: INR922 crores
  • Net debt reduction of INR19 crores since March 31, 2026

Business Updates and Management Commentary

Operational Challenges:

  • Q2 performance described as an "aberration" with dissatisfaction expressed
  • Laminates business saw no growth for the first time in several years
  • International business faced multiple challenges: high freight costs, connectivity issues, vessel availability problems, longer transit times, and competitive landscape pressures
  • Domestic laminates business also underperformed growth expectations

Expansion Projects:

  • Adding two more laminates production lines at Andhra Pradesh plant
  • Expansion running on schedule with commercial production expected by Q4 FY27

Business Segment Outlook:

  • Plywood and allied business (veneer, flooring, doors) have all turned EBITDA positive
  • Overall plywood segment showing marginal losses with expectations to become profitable at EBITDA level
  • Chipboard business crossed INR100 crores revenue (INR107 crores exactly) with more than doubling YoY revenue
  • Chipboard EBITDA profitability at approximately 8%

Capacity Utilization and Growth Plans:

  • Current asset base capable of delivering approximately INR5,000 crores revenue at full capacity
  • Andhra Pradesh facility has space for additional expansion: can add 3 more laminates lines and 1 more chipboard line
  • Plywood business requires at least one more plant to target INR1,000 crores revenue (current plant capacity: ~INR450 crores)
  • Full capacity utilization for plywood expected by FY2029
  • Tier two brand launched in October 2026 for South India market to improve plywood utilization

Product Development

  • New product introductions in chipboard category
  • Plans to introduce additional innovative products never before available in Indian market
  • Product acceptance and quality reported as doing very well across all segments

Guidance and Outlook

  • Full-year revenue guidance revised to 16-18% growth (previously 18-20%)
  • Expectation of better H2 performance compared to H1
  • Management confident about improving laminates business performance in coming quarters
  • Targeting debt reduction of approximately INR100 crores for full year FY27
  • No specific margin guidance provided for H2, but management believes it will be better than H1

Market Conditions

  • European market not growing with local manufacturing plants struggling
  • Company winning market share despite challenging European market conditions
  • Logistical issues expected to subside in H2
  • Recent oil price retraction viewed positively for geopolitical situation and business impact

Q&A Highlights

  • Laminates degrowth attributed to both high base in previous year and export logistical challenges
  • International revenue not considered lost but expected to be recorded in subsequent quarters
  • Plywood business expansion into Western India (1 year ago) and East market (early FY27)
  • Focus on premium segment with recent addition of tier two brand for South India
  • HMR contribution to panel segment: 15-20% range
  • Pre-lam contribution: 45-50% of total volume
  • Current asset turnover and ROCE discussion: laminate business delivering ~30% pre-tax ROCE in H1