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ICICI Securities Report
Our positive stance on Greenpanel Industries Ltd. stands bolstered post our interactions with dealers and industry participants indicating medium density fibre demand remains healthy and continues to grow in double digits YoY (in the ongoing quarter too) despite a YoY strong base.
The growth in MDF continues to be driven by increase in demand for readymade furniture even post-pandemic. Also, the pick-up in housing market seen after the pandemic has further aided demand growth.
As per industry participants, imports of MDF have not yet gathered pace and this is likely to remain so in the near term too because MDF prices in the international markets remain high.
MDF players have not taken any price hike in Q2 FY23-to-date despite raw material price inflation, hence margins will likely contract QoQ/YoY (in line with management guidance).
We have factored-in margins of 26.2% for nine months-FY23E for the MDF segment (versus 33.3% in Q1 FY23) and do believe it has upside risk if raw material prices soften.
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