Greenpanel Industries Limited: A Resilient Turnaround in Q2 FY26

Greenpanel Industries Limited, a leading player in India's wood panel sector, has demonstrated a remarkable turnaround in its performance for the second quarter and first half of the financial year 2026 (Q2 & H1 FY26). After navigating a challenging Q1, the company's strategic shifts towards volume growth and cost optimization have yielded significant results, leading to a robust improvement in both operational and financial parameters. For Q2 FY26, Greenpanel reported consolidated revenues of INR 389.4 crore, marking a healthy 17.1% year-on-year growth and an impressive 20.7% sequential increase from Q1.

The company's core segments, MDF and Plywood, contributed significantly to this growth. MDF revenue stood at INR 355 crore, accounting for approximately 91.03% of the total revenue, while Plywood contributed INR 35 crore, representing about 8.97%. This strong revenue performance was underpinned by exceptional volume growth in the domestic MDF segment, which surged by 30.5% year-on-year and 26.8% quarter-on-quarter. The Plywood segment also showed a strong recovery, registering an 18% growth compared to Q1 FY26. This indicates effective market penetration and a positive response to the company's renewed sales and marketing efforts.

Strategic Initiatives Driving Performance

Greenpanel's impressive Q2 performance is a direct outcome of several strategic initiatives. The company re-energized its sales teams through an annual sales conference and focused reviews, while strengthening its distribution network via the Bali Privilege Club Tour and an upgraded MITR 2.0 app, which saw over 13,000 participants. Digital outreach and branding efforts were amplified across more than 7,000 dealer and sub-dealer outlets, enhancing market visibility. Furthermore, Greenpanel expanded its product portfolio with the launch of HDWR Door, Thin MDF, and FRMDF, supported by targeted campaigns. These new products are designed to meet evolving industry demands for high-performance and precise craftsmanship.

Simultaneously, the company focused on improving its 'Cost Base' and profitability. This involved revisiting and strengthening organizational structures and processes, rationalizing the raw material mix, and improving consumption efficiencies, particularly in power and fuel across its three plants. These efforts led to a significant 5.5% sequential reduction in the operating cost of production, contributing to the improved gross margin of 47.7% in Q2 FY26, up from 47.0% in Q1 FY26.

Financial Health and Outlook

Despite the strong operational turnaround, Greenpanel's net profit was impacted by external factors. The company incurred an adverse exchange rate movement on its Euro-denominated borrowings for the new MDF plant, resulting in an unrealized MTM non-cash loss of approximately INR 12.4 crore in Q2 FY26 (INR 39.9 crore in H1 FY26). Additionally, higher depreciation and interest expenses related to the new plant impacted the first half results by around INR 20 crore compared to the previous year. Consequently, the reported PBT and PAT remained negative for the quarter. However, the Operating EBITDA, excluding these one-off currency movements, stood at a robust 10.2% of total sales, indicating strong underlying operational health.

Greenpanel also demonstrated disciplined financial management by reducing its Net Debt to INR 173 crore, a reduction of approximately INR 60 crore from June 30, 2025. Adjusted for FX changes, the actual reduction was even higher at around INR 71 crore. The company's Cash Conversion Cycle (CCC) improved significantly, reducing by 17 days compared to June 30, 2025, reflecting better working capital management. Credit ratings for working capital facilities were reaffirmed by ICRA and CARE at A+ (Negative Outlook) during Q2 FY26, underscoring its comfortable liquidity position.

Management's Forward View

Management is optimistic about the domestic market, guiding for high teens growth in domestic MDF volumes for the full year FY26. They anticipate operating EBITDA, excluding FX and one-offs, to average in the high single-digit to early double-digit range for the full year. While no immediate price hikes are foreseen, the focus remains on volume growth and value-added products to enhance margins. The company expects the core operating EBITDA margins to build up to 10% plus over the next two quarters. Greenpanel's proactive approach to market dynamics, including adherence to BIS norms and optimizing production across its fungible capacities, positions it well for sustained growth and improved profitability in the evolving wood panel industry.