The Indian furniture market is one of the fastest growing in the world. Steady growth of the Indian economy, an ever growing realty and hospitality sector and increased spending power with lifestyle changes have fuelled the industry to a large extent. The Indian furniture market is characterised by numerous small players accounting for nearly 80% of domestic production. While the furniture market is primarily concentrated in metropolitan cities and subsequently followed by Tier 1 and Tier 2 cities, with major user segments being the residential, office, commercial and institutional segments.
The industry is seeing a shift from unbranded to branded products and also the fast growing replacement market is helping the industry to expand in a big way. Moreover, GST would also narrow the price between organised and unorganised players. Greenply Industries Ltd has been a leader in the plywood and medium density fibre (MDF) boards sector, accounting for almost 26% of the organised plywood market and 30% of the MDF market in the country.
It has four state of the art manufacturing facilities for plywood and one facility for MDF spread across the country, producing world class products for the domestic and global markets. Over the years it has become a preferred partner for a large number of office and home builders, having a comprehensive product portfolio, servicing clients at every point of the price spectrum under brand names of Greenply Plywood, Eco, Green Club, Premium Ply to name a few.
MDF is currently the smallest segment of the Indian plywood and panel industry. It is made by breaking down hardwood and softwood residuals into wood fibres. Globally, MDF consumption is very high compared to plywood, while in India it is skewed in favour of plywood to a large extent. Given MDF’s low cost and better utility, its consumption continues to grow in the country and offers tremendous opportunities to organised players and thus capture the ever growing market.
Greenply has many undergoing expansion plans like setting up a new facility in Uttar Pradesh to expand capacity by 40% in the premium plywood segment. It is also setting up new facilities in Gujarat and Andhra Pradesh, and in Gabon in West Africa. Its financial performance has been very consistence over the years, with the stock quoting at Rs 300 on the Indian stock exchanges. Given the expansion plans underway and better profitability in the future, Greenply Industries could see its stock price appreciate from the current levels to Rs 385 in a one-year time horizon.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.