Greenpanel Industries Ltd. (Demerged Entity of Greenply)

I have done analysis on this company and below are the details. Some parts which were previously discussed are left out.

Business
Largest MDF manufacturer in India with around 28% share. Future betting is that India will move away from Plywood to MDF just like rest of the world. The trend is visible in online sales and how young people give importance to looks.

Financials & Covid
Company has taken loan in dollars internationally for expansion in southindia. Strengthening of dollar, post covid has impacted margins. Revenues were growing consistently but 2023 was flat because.

• Due to slow down in global market, Thailand, Vietnam dumped MDF into india at cheaper rates.
• Other players in the market were also increasing the capacities.

P/E
On websites or screener, you would see the P/E is 16. In correct words the P/E shown there was 12 month trailing P/E that means 3 bad quarters with around 50 Cr profit and one good quarter with around 110 Cr profit.
It is clear that above mentioned 2023 conditions are going to continue until 2025. In simple words, if you calculate future P/E with 50Cr profit in future quarter, P/E will be around 25-sh. Because business conditions will not change and this is going to be the normal profit.

Management
So far from the reports, i found management to be responsible, caring about small shareholders, trying to use debt carefully. Overall i feel a 5 star management here.

Moat of the company
I could not think of any strength which can be called moat. For example, It might not take a long time for Century Ply to invest into MDF and use its own distribution network to sell much more effectively. Note that Green panel has to create Distribution network and work on branding. But Century ply etc might not be. Yes, entry is difficult for new industries due to investment etc etc, But if really trend is turning towards MDF from Plywood, it would just take 3-4 year for other companies to catch up.

Conclusion
I liked the management and their direction, but MDF market has to be created or transferred from plywood. I believe MDF is a future but who will emerge as a winner is difficult at the moment. For me any plywood company can easily venture into MDF and use their network and customer reach etc.

So waiting for better business conditions and see if GreenPanel can actually emerge as a winner.