EPS of $3.34 decreased by 54.8% from previous year
Gross margin of 55.6%
Net income of 410.03M
""We are implementing several initiatives aimed at enhancing operational efficiency and managing costs better to withstand volatile market conditions."" - CEO
In Q2 2024, Greenpanel Industries Limited reported a total revenue of ₹3,987.3 million, reflecting a decrease of 15.51% year-over-year and 7.69% quarter-over-quarter. The company faced significant pressure on margins, with gross profit tumbling by nearly 50% compared to the previous year. Net income fell 54.87% year-over-year but showed a recovery from Q1 2024 results, signaling some resilience in current operations. The management highlighted challenges stemming from increased cost pressures and a competitive pricing environment but expressed optimism about recovery in demand as infrastructure projects accelerate.
The balance sheet remains relatively healthy, supported by a current ratio of 3.13, ensuring liquidity for operational needs. Management reiterated its commitment to operational efficiency, which should positively impact long-term margins. As Greenpanel navigates through these challenges, investors should closely monitor key metrics related to demand recovery and cost management initiatives.
Key Performance Indicators
Revenue
3.99B
QoQ: -7.69% | YoY:-15.51%
Gross Profit
2.22B
55.61% margin
QoQ: -15.46% | YoY:-49.93%
Operating Income
573.83M
QoQ: -38.22% | YoY:-81.58%
Net Income
410.03M
QoQ: 17.75% | YoY:-54.87%
EPS
3.34
QoQ: 17.97% | YoY:-54.79%
Revenue Trend
Margin Analysis
Key Insights
**Revenue:** ₹3,987.3 million (YoY: -15.51%, QoQ: -7.69%)
**Gross Profit:** ₹2,217.5 million (YoY: -49.93%, QoQ: -15.46%)
**Operating Income:** ₹573.8 million (YoY: -81.58%, QoQ: -38.22%)
**Net Income:** ₹410.0 million (YoY: -54.87%, QoQ: +17.75%)
**EPS:** ₹3.34 (YoY: -54.79%, QoQ: +17.97%)
Financial Highlights
Financial Performance Overview:
- Revenue: ₹3,987.3 million (YoY: -15.51%, QoQ: -7.69%)
- Gross Profit: ₹2,217.5 million (YoY: -49.93%, QoQ: -15.46%)
- Operating Income: ₹573.8 million (YoY: -81.58%, QoQ: -38.22%)
- Net Income: ₹410.0 million (YoY: -54.87%, QoQ: +17.75%)
- EPS: ₹3.34 (YoY: -54.79%, QoQ: +17.97%)
The considerable decline in gross profit margin indicates increasing input costs and pricing pressures, particularly as competition in the medium density fibreboard (MDF) sector intensifies. While the sharp drop in operating and net income could raise investor concerns, the slight quarter-over-quarter improvement for net income suggests recovery signs that may imply successful cost control measures.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
3.99B
-15.51%
-7.69%
Gross Profit
2.22B
-49.93%
-15.46%
Operating Income
573.83M
-81.58%
-38.22%
Net Income
410.03M
-54.87%
17.75%
EPS
3.34
-54.79%
17.97%
Key Financial Ratios
currentRatio
3.13
grossProfitMargin
55.6%
operatingProfitMargin
12.7%
netProfitMargin
10.3%
returnOnAssets
2.4%
returnOnEquity
3.22%
debtEquityRatio
0.14
operatingCashFlowPerShare
$3.34
freeCashFlowPerShare
$3.34
priceToBookRatio
3.66
priceEarningsRatio
28.41
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Earnings Call Insights:
- Operational Efficiency: Management stated, "We are implementing several initiatives aimed at enhancing operational efficiency and managing costs better to withstand volatile market conditions." This focus on efficiency is crucial for sustaining margins amidst rising costs.
- Market Recovery Outlook: The CEO remarked, "We expect demand to pick up in the second half as government infrastructure projects ramp up, providing us with enhanced sales opportunities in the MDF space." Investors should note this potential demand surge as a key area for monitoring.
"We are implementing several initiatives aimed at enhancing operational efficiency and managing costs better to withstand volatile market conditions."
— CEO
"We expect demand to pick up in the second half as government infrastructure projects ramp up, providing us with enhanced sales opportunities in the MDF space."
— CEO
Forward Guidance
Management provided a cautiously optimistic outlook for the second half of FY 2024, anticipating recovery in demand driven by infrastructure spending. They set a target to stabilize production and maintain cost controls to navigate ongoing volatility in input costs. Key factors to watch for include shifts in market demand, potential price changes in input costs, and effectiveness of cost management strategies. Adjusting to these dynamics will be critical for realizing targeted profitability improvements.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
GREENPANEL.BO Focus
55.61%
12.70%
3.22%
28.41%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Greenpanel Industries Limited is at a pivotal moment, facing significant challenges but also opportunities for growth through strategic operational enhancements and market demand recovery. While current performance metrics show a contraction, the potential for resurgence in demand driven by infrastructure spending may serve as a catalyst for revenue growth. As operational efficiencies take effect, the outlook could improve, making this a potential watch for value-based investors looking for recovery plays in the Basic Materials sector.
Key Investment Factors
Growth Potential
Greenpanel Industries has significant growth potential through expanding its market presence in the MDF and allied products category, particularly with a focus on new product developments and operational efficiencies.
Management's emphasis on government infrastructure spending may also enhance growth prospects in the coming quarters.
Profitability Risk
The major risks revolve around raw material price volatility, intense competition in the MDF industry, and potential shifts in consumer demand due to economic conditions.
The company must navigate these challenges while maintaining profitability and market share, which may be impacted by external economic factors.
Financial Position
With a solid current ratio of 3.13 and cash reserves increasing to ₹3,100.975 million, Greenpanel Industries maintains a robust financial position. However, it is essential to monitor the debt levels, which could increase if cash flow remains under pressure from declining revenues.
SWOT Analysis
Strengths
Strong market presence in the MDF segment
Healthy current ratio indicating liquidity
Diverse product range catering to multiple segments
Experienced management team
Weaknesses
Significant decrease in profitability compared to previous quarters
High dependency on external raw material pricing
Lack of strong peer performance benchmarks
Opportunities
Potential growth in demand due to government infrastructure projects
Expansion of product portfolio to include environmentally friendly materials
Increased market share through competitive pricing strategies
Threats
Intensifying competition in the MDF sector
Economic uncertainties impacting demand
Fluctuations in raw material costs affecting profitability