Greenlam Industries Limited laminates pre-forex margin falls 590 bps

Greenlam Industries Limited’s Laminates & Allied segment reported second-quarter fiscal 2027 (Q2FY27) revenue of Rs 658.0 crore, unchanged year on year, as sales volume fell 12.0%; earnings before interest, tax, depreciation and amortisation (EBITDA) before foreign-exchange effects declined 32.8% to Rs 79.3 crore and margin contracted 590 basis points to 12.0% from 17.9%.

What happened to Greenlam’s laminates business in Q2FY27?

Greenlam’s Laminates & Allied revenue was flat in Q2FY27 because a 12.4% increase in average realisation did not offset a 12.0% decline in sales volume. Net revenue remained Rs 658.0 crore versus Q2FY26, while sales fell to 5.09 million sheets from 5.79 million sheets and average realisation rose to Rs 1,241 per sheet from Rs 1,104.

The sequential revenue comparison was more favourable, but operating profit still declined. Net revenue rose 10.4% from Rs 596.1 crore in Q1FY27 and sales increased 10.2% from 4.62 million sheets, yet pre-forex EBITDA fell 4.4% from Rs 82.9 crore and the margin declined 190 basis points from 13.9% to 12.0%.

In the first half of fiscal 2027 (H1FY27), Laminates & Allied revenue increased 3.4% to Rs 1,254.1 crore from Rs 1,212.7 crore in H1FY26. Sales volume nevertheless declined 10.6% to 9.72 million sheets, while average realisation increased 14.4% to Rs 1,240 per sheet, indicating that higher realisation rather than volume growth supported the half-year revenue increase.

Why did Greenlam’s laminates margin decline?

Greenlam’s pre-forex EBITDA margin declined because operating profit fell while segment revenue was unchanged. Pre-forex EBITDA dropped Rs 38.7 crore, or 32.8%, to Rs 79.3 crore in Q2FY27, while revenue stayed at Rs 658.0 crore; gross profit also fell 6.4% to Rs 347.8 crore and gross margin narrowed 360 basis points to 52.9%.

Including foreign-exchange effects, Laminates & Allied EBITDA was Rs 79.6 crore in Q2FY27 compared with Rs 122.9 crore a year earlier, a 35.2% decline. The corresponding margin was 12.1%, down 660 basis points from 18.7%, making the reported margin decline including forex 70 basis points larger than the pre-forex decline.

Greenlam reported Q2FY27 turbulence from geopolitical matters, including the Middle East war, fluctuations in crude prices and crude-linked commodities, foreign-currency movements, higher freight costs, container and vessel availability delays, and longer transit times. The segment data show that these conditions coincided with lower sales volume, gross profit and EBITDA despite the Rs 137 per-sheet increase in average realisation.

How far did Greenlam’s production and utilisation fall?

Greenlam’s Laminates & Allied production fell 18.3% year on year to 4.83 million sheets in Q2FY27 from 5.91 million sheets. Annual installed capacity was unchanged at 24.52 million sheets, and annualised capacity utilisation declined to 79% from 96%, a reduction of 17 percentage points.

Production was also lower than in the prior quarter, falling 1.3% from 4.90 million sheets in Q1FY27 to 4.83 million sheets in Q2FY27. Utilisation moved from 80% to 79%, even as quarterly sales increased 10.2% to 5.09 million sheets from 4.62 million sheets.

For H1FY27, production declined 12.0% to 9.73 million sheets from 11.06 million sheets in H1FY26. H1 annualised utilisation fell to 79% from 90%, while installed capacity remained 24.52 million sheets in both periods, showing that the utilisation change came from lower output on the existing manufacturing base.

How did Greenlam’s H1FY27 performance compare with Q2FY27?

Greenlam’s H1FY27 margin decline was smaller than its Q2FY27 decline, although segment EBITDA still fell year on year. Pre-forex EBITDA for H1FY27 declined 15.1% to Rs 162.2 crore from Rs 191.1 crore, and margin fell 290 basis points to 12.9% from 15.8%; in Q2FY27 alone, EBITDA fell 32.8% and margin declined 590 basis points.

The half-year gross-margin movement was also less severe than the quarterly movement. H1FY27 gross profit increased 0.4% to Rs 677.3 crore from Rs 674.7 crore as revenue grew 3.4% to Rs 1,254.1 crore, producing a gross-margin decline of 160 basis points to 54.0%; Q2FY27 gross margin declined 360 basis points to 52.9%.

Capital employed in Laminates & Allied stood at Rs 853.8 crore at the Q2FY27 reporting point, compared with Rs 794.7 crore in Q2FY26 and Rs 859.5 crore in Q1FY27. The quarter therefore combined flat revenue and 79% utilisation with capital employed Rs 59.1 crore above the year-earlier amount; the presentation does not provide a segment return-on-capital measure.

Conclusion

Greenlam’s Q2FY27 Laminates & Allied result shows that the 12.4% rise in average realisation to Rs 1,241 per sheet did not compensate for the 12.0% fall in sales volume and 18.3% reduction in production. Revenue therefore remained Rs 658.0 crore, while pre-forex EBITDA declined to Rs 79.3 crore and the margin fell to 12.0% from 17.9%.

The disclosed matters to watch are sales volume after the Q2FY27 level of 5.09 million sheets, utilisation after its decline to 79%, and gross margin after the 360-basis-point quarterly reduction. Greenlam also identified higher freight costs, volatility in crude-linked commodities and currencies, and delays in container and vessel availability as Q2FY27 operating conditions that remained relevant to subsequent performance.