ICICI Securities has lowered its target price for Greenpanel Industries to Rs 131, maintaining a 'Hold' rating. The decision follows a weak Q2 FY2027 performance, where rising costs and a sharp drop in export volumes put significant pressure on profit margins.
ICICI Securities has lowered the target price for Greenpanel Industries to Rs 131 from its previous target of Rs 176, following a challenging second quarter in the 2027 fiscal year. The brokerage firm has maintained a 'Hold' rating, reflecting a more cautious stance on the company's ability to maintain profit margins in a highly competitive market.
The company’s recent financial report for the July-September quarter showed a 4.6% year-over-year revenue increase, reaching Rs 407.3 crore. However, this growth did not translate into better profitability. The consolidated operating profit margin (EBITDA margin) contracted significantly, falling to 7.5% from 10.2% in the same period last year. This decline is a key concern for investors, as it suggests the company is facing difficulty in managing costs or maintaining pricing power amid stiff competition in the Medium-Density Fibreboard (MDF) sector.
Several factors have contributed to these operational headwinds. International business, which is an important growth driver, saw export volumes plunge by 32.3% due to ongoing trade route disruptions in West Asia. Domestically, the outlook remains modest, with flat demand from original equipment manufacturers (OEMs) limiting the company's ability to grow sales. High raw material costs have further intensified the pressure on margins, leaving less profit after accounting for production expenses.
In response to these developments, ICICI Securities has revised its earnings outlook for the company for fiscal years 2027 and 2028. The brokerage also reduced the valuation multiple it uses to calculate the stock’s price, moving from 20x to 15x. The stock market reacted to the earnings report with a decline, with the share price falling about 5.9% to trade near Rs 124.50 recently.
For investors, the primary concern is when the company’s profit margins will stabilize. While management has indicated confidence in a recovery in volume growth and a return to double-digit operating profit margins in the coming quarters, analysts are waiting to see consistent operational improvements. The next important updates to track will be signs of a recovery in export volumes, stability in raw material costs, and whether the company can successfully drive domestic demand to improve its overall performance.