Greenlam Industries: Q2FY24 Analyst meet KTAs

Management expect 20% revenue growth (laminates 15% growth) in FY24 with 13-14%
EBITDA margins | Marginal laminates price cut in Q2 | Raw material prices are expected to
remain similar QoQ in Q3 | Prantij (laminate plant) is operating close to 100% CU (> 10%
OPM) | It targets 40-50% CU in Q4FY24 for ply plant.

Guidance, demand, pricing and cost trends

 Guidance: Management expect 20% revenue growth (laminates 15% growth) in FY24
with 13-14% EBITDA margins. (For H1FY24, revenue growth/ EBITDA margins are
13/12.5%).
 Demand: For H1FY24, India laminates export has been muted. For the same period,
Greenlam has gained market share, it export grew 12% YoY. Israel demand has halved
owing to geo-political issue. It expects 95% capacity utilisation for laminates in next six
months (including AP expansion).
 Pricing: It have reduced its laminates prices in international markets, price cut is taken in
some categories in domestic market too in Q2. Its impact has reduced NSR by ~1.5%
QoQ in Q2.
 Raw material: Design/ kraft paper prices are stable from last 2 quarter. While, chemical
prices has decreased. Overall, raw material prices are expected to remain similar QoQ in
Q3.

Project update
 Capex: It has plan to incur INR 12bn Capex for plywood, particle boards and laminate
expansion. It spent INR 4.5bn Capex in FY23. Barring small Capex, remaining amount
will be incur in FY24 (H1FY24 Capex: INR 4bn).
 Prantij: Prantij (laminate plant) is operating close to 100% CU. It is manufacturing
commodity, mid as well as high range laminates. Only this plant produces commodity
laminates for the company. Its EBITDA margin has been better than company initial
expectation (>10% OPM).
 Laminates expansion (AP – 3.5mn sheets): Laminates AP expansion 3.5mn sheets
(capex INR 2.4bn) got operational at Q2FY24 end (INR 6bn is it revenue potential). It has
not contribution to revenue in Q2. Post this expansion, overall laminates capacity
increased to 24.5mn sheets. This plant will be export focused. 6*14 feet laminates size
added to portfolio by commissioning of this plant. Next year optimum utilisation is
expected for this plant. It has added 3 press at this plant, it can further add more 3-5
press at this location.
 Future laminate expansion: No scope left to do laminate brownfield expansion at Behror
and Nalagarh plants. However, the company can do brownfield expansion at Prantij and
AP plant.
 Plywood: It targets 40-50% CU in Q4FY24 for ply plant (INR 4bn yearly revenue
potential).
 Particle board expansion:
 The greenfield Particle board (231K CBM) is on track to commission by FY24 end.
Particle board Capex guidance increased by 30% to INR 7.75bn owing to increase in
commodity price, capability optimization (more dimension particle board production
capability) and currency depreciation.
 It targets 50% CU in FY25 (EBITDA breakeven is expected in first year). At 60-65% CU, it
will hit PBT breakeven. It expects 20-25% OPM at optimum utilisation. Depreciation will
be INR 0.5bn annually.
 45-50% of particle board market is in south, so it plans to commission its plant in south.
Main focus will be pre-laminated board.
 Company has also approved additional Capex of INR 0.3/0.35bn for Ply/ laminates (AP)
plant. Due to these Capex, it will incur less Capex in future, when it will do brownfield
laminate expansion.

Other highlights
 Door segment performance are expected to improve further.
 Employee strength is more than 6500, as it has employee stationed in export countries
too. It sells majority of its product in export in its own name. Greenlam has 25-30% share
in India’s laminate export (biggest exporter from India).
 Pre-lam particle board sells at 25-30% lower price vs pre-lam MDF.
 Greenlam laminates cost of production is 15-20% lower vs regional leader in
international markets. It sells at its laminates in export markets at lower price vs regional
leaders in that market. However, pricing gap is reducing.
 Now, Plywood plantation takes 3-5 year vs 7 year earlier. All kinds of wood can be used
for particle board, its plantation will take just two year.