Anand Rathi has reiterated a BUY recommendation on Greenpanel Industries with a target price of Rs 320, implying a substantial upside from the current market price of Rs 190. The brokerage believes the medium-density fibreboard (MDF) cycle has likely bottomed out, positioning the company for a sharp earnings recovery over the next two financial years. While Q4FY26 performance remained broadly in line with expectations, the stronger operational trajectory, improving utilisation levels, margin expansion, and stabilising industry dynamics have reinforced confidence in Greenpanel’s long-term growth story. Anand Rathi expects the company’s EBITDA to register an aggressive 86% CAGR between FY26 and FY28, driven by better MDF pricing power, improving operating leverage, and stronger demand recovery across the building materials sector.

Greenpanel’s Q4FY26 Performance Signals Early Recovery Momentum

Greenpanel Industries delivered a steady operational performance during the March quarter despite continued pricing pressures in the MDF industry. Consolidated revenue rose 17.5% year-on-year to nearly Rs 3.99 billion, while EBITDA surged 128% to Rs 349 million. Sequentially, EBITDA improved 7.1%, reflecting early signs of operational stabilisation.

The company’s MDF division remained the primary growth engine. MDF sales volumes climbed 27.8% year-on-year to 130,197 CBM, marking the third consecutive quarter of robust double-digit growth. Domestic demand remained especially resilient, with domestic MDF volumes rising 29.5%, while export growth stood at 17.4%.

However, pricing remained under pressure. MDF realisations slipped 9.5% year-on-year and remained broadly flat sequentially, highlighting that the industry is still navigating excess supply conditions. Even so, Greenpanel managed to improve its adjusted MDF EBITDA margin to 8.9% during the quarter, compared with just 3.5% in the year-ago period.

Management Focus Shifts Towards Market Share Expansion

The company has strategically prioritised market share gains over aggressive pricing in FY26. This shift appears to be paying off as utilisation levels continue to improve steadily. Anand Rathi estimates that industry operating rates may rise from 71.5% in FY26 to nearly 76.7% in FY27, laying the groundwork for future pricing recovery.

Management expects MDF demand growth to remain in the early double-digit to mid-teen range in FY27. Importantly, Greenpanel believes it can continue growing volumes at a pace similar to or higher than the broader industry. That assumption is critical because higher utilisation rates generally unlock stronger operating leverage in MDF manufacturing businesses.

The brokerage also highlighted that pricing power could meaningfully return from FY28 onwards as industry operating rates approach the crucial 80% threshold. That would potentially trigger a sharp rebound in profitability across the sector.

Plywood Business Shows Signs Of Revival After Prolonged Weakness

Greenpanel’s plywood segment also delivered encouraging signals during Q4FY26. Segment revenue increased 13.4% year-on-year, while sales volumes rose 20% — the first positive volume growth seen in nearly 15 quarters.

More importantly, plywood EBITDA margins improved sharply by 610 basis points sequentially to 7.5%. Although the plywood business still contributes a relatively small share of total revenue, the revival indicates broader demand improvement across India’s building materials ecosystem.

Management stated that the immediate focus remains on fully utilising existing capacities rather than undertaking aggressive expansion plans. This disciplined capital allocation approach could support balance-sheet strength over the coming years.

Price Hikes Introduced To Offset Rising Chemical Costs

Greenpanel has already initiated price increases to counter elevated input costs. The company implemented a 15% price hike in MDF products and a 6% increase in plywood prices during April 2026. These increases were primarily aimed at offsetting the sharp 40-45% rise in chemical prices following geopolitical disruptions linked to the Iran conflict.

Management cautioned that the complete impact of these hikes may not fully reflect in Q1FY27 results because of phased implementation, pending dispatches at older prices, and limited discounting activity in certain markets.

Timber prices, which account for roughly 60-65% of raw material costs, are expected to remain stable in FY27. This could provide additional support to margin expansion if chemical prices moderate gradually.

Financial Outlook Suggests Sharp Earnings Acceleration Ahead

Anand Rathi expects Greenpanel’s earnings trajectory to improve materially over the next two years. Revenue is projected to rise from Rs 15.3 billion in FY26 to Rs 23.1 billion by FY28. EBITDA margins are expected to expand from 7% in FY26 to 16.2% by FY28.

The brokerage forecasts earnings per share to recover from a loss of Rs 1.3 in FY26 to Rs 8.7 in FY27 and further strengthen to Rs 16 by FY28. Return on equity is expected to improve from negative territory in FY26 to nearly 12.8% by FY28.

Below is a snapshot of key financial projections:

Balance Sheet Strengthening As Debt Reduction Continues

The company’s balance sheet position is gradually improving. Net debt declined to Rs 1.55 billion in March 2026 from Rs 1.63 billion in December 2025. Management has also ruled out major expansionary capex in FY27, instead budgeting only Rs 200-300 million for maintenance spending.

This conservative approach may allow Greenpanel to accelerate deleveraging while simultaneously improving return ratios as profitability normalises.

Valuation Comfort Emerges As Industry Cycle Nears Bottom

Anand Rathi believes the current valuation still offers attractive risk-reward potential. At the current market price, the stock trades at approximately 21.8x FY27 estimated earnings and 11.9x FY28 projected earnings.

The brokerage has maintained its target price of Rs 320 based on 20x FY28 estimated EPS. That target reflects confidence that Greenpanel could emerge as one of the key beneficiaries once the MDF industry returns to stronger pricing discipline.

Key Risks Investors Should Monitor

Despite the improving outlook, investors should remain mindful of several risks. A sharp slowdown in India’s real estate sector could impact MDF demand growth. Continued market share losses or prolonged oversupply conditions may also delay pricing recovery. Additionally, steep volatility in chemical prices remains a major profitability risk for the sector.

Still, Anand Rathi’s broader assessment suggests that Greenpanel is entering the early stages of an earnings recovery cycle, supported by stronger volumes, improving capacity utilisation, disciplined capital allocation, and gradually stabilising industry fundamentals.