ICICI Securities has issued a BUY recommendation for Greenlam Industries Limited, targeting Rs 310 over the next 12 months. The research report underlines Greenlam's strategic expansions, robust revenue outlook, and anticipated improvement in profitability and return ratios. The company, a leader in laminates with an expanding footprint in plywood and particleboards, stands poised to benefit from India's real estate completion up-cycle and the broader formalization of building materials demand. Key risks include potential slow ramp-up of new units and volatility in export markets.

Summary of the ICICI Securities Call

ICICI Securities has reaffirmed conviction in Greenlam Industries, painting a bullish picture based on recent capacity expansions, improving industry tailwinds, and prospective financial gains. The stock, currently priced at Rs 261, is projected to reach Rs 310 within one year, driven by a blend of operational scale, product diversification, and demand resurgence from both domestic and export markets. Crucially, Greenlam's transition from single-digit to mid-teen return ratios sets it apart in the building materials space.

Investment Rationale and Strategic Outlook

Greenlam Industries has completed its major capex cycle, deploying Rs 1,450 crore across plywood, chipboard, and laminate facilities. This investment extends its addressable market from Rs 11,000 crore in FY22 to a formidable Rs 49,000 crore presently, allowing the company to tap into burgeoning demand for surface and substrate solutions. Management projects revenues to breach Rs 4,500 crore within three to four years as utilization ramps up across new lines.

The ramp-up offers pronounced operating leverage, forecasting a robust revenue CAGR of 16.7% from FY25 to FY28. Expanding capacity and product diversification—especially in particleboards and plywood—will underpin steady topline growth and margin improvement. The EBITDA margin is expected to rise from 10.7% in FY25 to 14.1% in FY28, while earnings growth is projected at a staggering 55.8% CAGR over the same period.

Financial Performance and Projections

Greenlam continues to deliver industry-leading market share, accounting for 17.8% of India's organized laminate market and nearly 30% of exports. FY25 revenue stood at Rs 2,569 crore, with projections soaring to Rs 4,083 crore by FY28. Segment analysis reveals laminates as the revenue mainstay, but plywood and particleboards are set to grow at 36.3% and turn EBITDA positive by FY27, respectively. Management prioritizes margin stability and prudent debt management, with net debt anticipated to peak at Rs 995 crore in FY26 before declining.

Here is a financial snapshot:

Industry Backdrop and Secular Drivers

Greenlam rides on the back of a surging building materials market, buoyed by strong residential completions and formalizing supply chains. India's laminate market registered a remarkable 16.8% CAGR from FY20 to FY25, while organized segments expanded their dominance as consumer preferences shifted toward branded offerings. Parallelly, increased real estate completions in top Indian cities are expected to drive demand for advanced surface solutions, aligning perfectly with Greenlam’s product range and delivery strengths.

Key Risks and Challenges

Major risks include slower-than-anticipated ramp-up in new units and acute exposure to global uncertainties. Given 43.5% of Greenlam’s revenue stems from exports—particularly to the European Union—macroeconomic disruptions could derail growth momentum. Additionally, persistently high raw material prices and foreign exchange volatility may pressure profitability.

Valuation and Recommendation

ICICI Securities sets a 12-month price target of Rs 310, assigning a valuation multiple of 30x FY28 PE. With the real estate cycle showing signs of acceleration and Greenlam’s capex behind it, the company occupies a unique sweet spot in India’s fast-evolving building materials sector. Operating leverage, margin expansion, and improving return ratios bolster the investment case.

Conclusion: Long-Term Winners Play the Cycle

Greenlam Industries finds itself primed to win market share as real estate demand rebounds and the wood panel industry consolidates. Investors are advised to accumulate the stock in the Rs 240-270 band, with a stop loss at Rs 225, targeting Rs 310 over the next year. This conviction pick stands out for its scale of execution, product innovation, and strategic foresight amid India’s home décor revolution.