Key highlight from Q3 FY23 concall of Greenpanel Industries:
CMP: ₹ 287
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CMP: ₹ 287
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1. According to Greenpanel Industries' management, increased imports lowered MDF sales volume in December. Furthermore, demand for furniture from the United States and Europe is slowing.
As a result, countries such as Vietnam and Indonesia are now exporting significant amounts of MDF to those regions as well as other countries.
2. Short-term imports had taken a portion of the domestic market.
2. Short-term imports had taken a portion of the domestic market.
In India, the southern market accounts for 45% of total market share, with imports accounting for approximately 25% of this 45%.
3. When we compare the domestic and import MDF prices in this quarter, imports are 25% cheaper than domestic.
3. When we compare the domestic and import MDF prices in this quarter, imports are 25% cheaper than domestic.
Currently, Greenpanel has not made any price cuts in the domestic market, but if imports continue to rise, the company may be forced to do so.
4. The export realisation is down by 18% because of reduction of furniture demand from USA and Europe.
4. The export realisation is down by 18% because of reduction of furniture demand from USA and Europe.
Greenpanel’s average realisation for exports is low on a YoY basis because they implemented a price cut of about 12% in the export market. Additionally, the management reported that this quarter's export margin was only in single digit.
5. The management expects volume growth of 10-12% in FY24, with margins of 23-25%. The management also provided guidance on the expected Q4 volume of MDF, which is 1,40,000 cubic metres total, with 30,000-40,000 cubic metres of that coming from exports.
6.The demand for furniture from the United States and Europe is expected to rise. Indonesia and Vietnam may switch from MDF to furniture because they don't receive any margin from MDF. This could lead to a further decline in imports.
The gross debt balance at the end of December 2022 was 195 crores, and the company was making annual repayments of ₹50 crores.
7. Value added products consisted of 62% of total revenues and 51% of total volumes during the quarter.
7. Value added products consisted of 62% of total revenues and 51% of total volumes during the quarter.
Additionally, the import of MDF value-added products is relatively low.
Management stated that demand will be stable in FY24 because the majority of domestic manufacturers' capacities in MDF will be available at the end of FY24 or the beginning of FY25.
Management stated that demand will be stable in FY24 because the majority of domestic manufacturers' capacities in MDF will be available at the end of FY24 or the beginning of FY25.
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