Broker’s call: Greenlam Ind (Long)
Equirus Securities
Greenlam Industries' (GRLM) first-quarter results for the fiscal year 2027 revealed an 18% year-over-year growth in consolidated revenues, reaching ₹800 crore. This figure surpassed the expectations set by the industry leader, EE, by 3%. Notably, laminate revenues, which had declined by 9% quarter-over-quarter, increased by 7% year-over-year due to higher realizations, despite a 6% year-over-year drop in laminate volumes.
The plywood, veneer, and agricultural products segment experienced a healthy recovery, with revenues surging 20% year-over-year. Simultaneously, the chipboard facility continues to expand. Management maintained its optimistic revenue growth forecast of 18% for the fiscal year 2027. Gross margins improved to 52.9%, up by 17 basis points year-over-year and 134 basis points quarter-over-quarter, outperforming EE by 39 basis points.
Net price hikes, accounting for about 7-8% of the increase, offset the elevated chemical costs. Adjusted EBITDA margin expanded by 206 basis points year-over-year, reaching 10.2% after accounting for foreign exchange rates. The chipboard facility became EBITDA positive, while the plywood and agricultural products segment saw a narrowing of EBITDA losses year-over-year.
Management anticipates quarterly EBITDA breakeven for the plywood division by the end of fiscal year 2026. The company reduced its FY27E EBITDA forecast by 6% to account for the heightened impact of input costs in Q1 and expects further margin recovery in the newer segment to provide support. The article downgrades Greenlam Industries to "Long" from "Add," with a December 2027 target price of ₹296 and an unchanged one-year forward earnings estimate of ₹9.9.
The focus is on FY27 as the anticipated inflection point for the company. With significant capital expenditures completed, debt repayment is expected to intensify from FY28 onwards. All comments must adhere to English language, full-sentence format, and abide by the community guidelines, which prohibit abusive or personal language.
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