The EBITDA margins, which were at 12 per cent in Q2FY22
(quarter ending September 30, 2021) — a y-o-y improvement of 64 basis points —
is expected to be in the 13-14 per cent range over the next four-to-six
quarters.
Half yearly EBITDA stood at 9.7 per cent, an improvement of
248 basis points, y-o-y.
According to Manoj Tulsian, Joint MD and CEO, Greenply
Industries, despite the cost pressure on raw materials over the last 12 -15
months, price hikes have been “accepted across the market”. Demand conditions
have improved, with recoveries witnessed across the real estate sector. Market
share gains have happened at the cost of unorganised players, who have found
the going tough because of working capital constraints.
“If the current trend of recoveries continues, then the
margin guidance (EBITDA) is around 13-14 per cent over the next 12-18 month
period; that would be around 100-150-odd basis point improvement over what we
had in Q2FY22,” he told BusinessLine.
Elaborating on the demand recoveries, Tulsian said, the
working capital cycle has seen a reduction — from 42 days to 38 — indicating
faster churn in the market. Supply disruptions are not an issue either in
recent times.
For H1FY22 (April to September) the company reported
consolidated gross revenues of ₹691 crore with a net profit of ₹36 crore. The
EBITDA for the period stood at ₹67 crore.
Margins to improve
Margins are expected to witness a further improvement with
the proposed MDF (medium density fibre) boards unit at Vadodara coming
on-stream around Q4FY23.
The greenfield manufacturing plant, with a capacity of 800
CBM per day, will come-up at Vadodara in Gujarat at a likely cost of ₹550
crore. Land has been acquired, plant and machinery ordered and construction
activities have already begun at Vadodara. Discussions are on with banks to
raise a debt of around 70 per cent of the proposed cap-ex (around ₹450-480
crore).
“Blended margins (plywood plus MDF businesses put together)
will be higher. MDF is not just a capex intensive business, but has higher margins
too,” Tulsian said. The business is expected to add ₹600-650 crore every year
to the company’s top-line.
Greenply is also investing nearly ₹115 crore in
a plywood unit at Lucknow. The unit is expected to come on-stream by Q4 of this
fiscal. Total capacity, post the unit beginning commercial operations, will be
at 48.40 million sq metre per annum, up from 34.90 million square metre per
annum. The annual turnover boost is expected to be in the range of
₹200-250-crore. Courtesy: www.thehindubusinessline.com
