Mumbai: Greenpanel Industries, India’s listed medium-density fibreboard maker, has shed 16% this year, but analysts are far from giving up on the stock. With capacity utilisation languishing at 55-60% and margins near multi-year lows, brokerages see a stock that could deliver healthy returns as operations settle down over the next three years.
The numbers tell the story of a company stuck in a cyclical trough, as in the March quarter, Greenpanel’s Ebitda margin collapsed to 9.1% from 15.9% a year ago, even as revenue grew 15.5% to ₹391.4 crore. Peers such as Century Plyboards and Greenply, with more diversified revenue streams, have fared better, leaving Greenpanel as the sector’s laggard.
The stock may have disappointed investors, but brokerages have largely been positive on Greenpanel. At 29 times trailing earnings, Greenpanel trades at less than half the multiples commanded by Century Plyboards (64.77x) and Greenply (40.58x). Bulls argue the discount is unwarranted given the company’s headroom for margin expansion—Nuvama estimates a 10% increase in capacity utilisation adds 150-200 basis points to margins, even without fresh capital expenditure.
Key Takeaways
- Greenpanel’s shares are down 12% in 2026, but analysts remain bullish.
- Factories running at 55-60% capacity are squeezing the company’s profit margins.
- Every 10% rise in utilisation adds up to 2% in margins.
- At 29x earnings, Greenpanel trades at half the valuation of its peers.
- The West Asia war is raising input costs and hurting export volumes.
According to Bloomberg data, 13 brokerages have a ‘buy’ rating on the stock, three recommend ‘hold’, and only one has a ‘sell’ call.
Management is looking at 85-90% utilisation by FY29, with margin recovery supported by a better retail and product mix, alternative timber sourcing, and a revival in West Asia exports. The major risk remains geopolitical, with supply chain disruptions from the West Asia conflict having driven up chemical costs, accounting for 40-45% of raw materials, leading to a 15% price hike.
Weakness not structural
Utkarsh Nopany, associate director at Anand Rathi Institutional Equities, is not particularly worried about the recent decline in share price, viewing it largely as cyclical weakness in the sector rather than a structural concern. He believes, “Greenpanel is not a short-term trade but a story that could play out over the next three years”.
The brokerage has maintained its ‘buy’ rating on the stock with an unchanged target price of ₹320.
According to Nopany, the company’s financials could see a meaningful improvement if capacity utilisation improves from the current 60% to around 85-90%, driving volume growth over the next three years. Another key trigger would be Ebitda margin expanding from the current 8.7% to nearly 20% over the same period. And finally, Nopany argues that valuation remains ‘inexpensive’, with the stock trading at 21.3 times estimated FY27 earnings and 11.6 times estimated FY28 earnings.
Over the past few years, Greenpanel’s volume growth has lagged that of its peers, and margins have also remained below peer levels, primarily due to lower capacity utilisation, explained Keshav Lahoti, Institutional Research analyst, HDFC Securities.
In Q4 FY26, the company delivered weaker performance than peers on both the volume growth and margin fronts, he added.
Lahoti pointed out that Greenpanel currently operates at lower margins than its peers, around 10%, a far cry from the 25-30% levels seen during the industry’s golden phase in FY21-23.
At the same time, peers such as Century and Greenply enjoy a far more diversified revenue mix, he noted. For Greenpanel, nearly 90% of its revenue came from the MDF segment, with the remainder coming from its plywood business.
“Given its relatively low utilisation levels, ramping up plant operations is critical to achieving healthy volume growth. Higher utilisation should also support margin expansion through operating leverage benefits,” Lahoti said.
Increasing capacity utilisation
Nuvama Institutional Equities said, “Given every 10% increase in MDF capacity utilisation, the company is likely to gain 150-200bp in margins”. It also noted that increasing the retail mix and using other species of timber should aid margin expansion.
The brokerage believes that, with utilisation at about 55%, the company has significant room for growth even without any capital expenditure. Nuvama has retained its ‘buy’ rating on the stock with an unchanged target price of ₹255.
Nuvama, after meeting Greenpanel’s management, said the company is targeting an 85–90% capacity utilisation by FY29. The road map for margin expansion includes higher utilisation, greater use of alternative timber species, a better retail mix and an improved product mix. The company also expects exports to pick up as West Asia markets reopen. Additionally, management aims to become net debt-free by the end of the year, the brokerage noted.
On Monday, the scrip ended down 3.4% at ₹195.14.
HDFC Securities remains upbeat about Greenpanel, given its market-leading position, strong balance sheet, and low plant utilization of around 50% in FY26. This, according to the brokerage’s 30 May report, “indicates significant opportunities to enhance margins through operational leverage, without the need for substantial capex in the medium term.”
The West Asia war
“On our side, we operated at 60% capacity utilization in quarter four FY ’26 and thus have a significant headroom available for organic growth next year without any additional material investments,” said Greenpanel’s managing director and chief executive officer, Shobhan Mittal.
He also told analysts on a post-earnings call on 18 May that the ongoing geopolitical situation in West Asia remains the biggest variable. He flagged that supply chain disruptions have sharply increased costs, particularly for chemicals, which account for 40-45% of Greenpanel’s raw material costs, while timber prices have remained stable over the past three to four months.
To offset the impact on margins, the MDF maker has announced a 15% price hike, he said.
“However, given the uncertainty around the war in the Middle East, I will be optimistically cautious at this point of time.”
Meanwhile, he expects domestic MDF demand to continue at a healthy pace, ranging from early double-digit to mid-teens.
All said, some market participants believe discounting pressure lingers, underscoring market competition.
