Automation to drive higher growth rate for India's MDF industry -Greenpanel CFO

June 13 (Reuters) - Indias furniture industry will witness major changes with the entry of domestic organised and international players bringing in more automation, driving higher growth rates for the medium density fiberboard (MDF) sector, a top executive at Greenpanel Industries Ltd (GREP.NS) said on Tuesday.

“Automation will lead to higher growth rates for the MDF industry since it is a raw material produced in fully automated plants,” Vishwanathan Venkatramani, chief financial officer at Indias largest manufacturer of MDF said in an interview on the Reuters Trading India forum.

MDF - used widely in furniture, sports equipment and shoe heels - has lower structural defects as compared to plywood, which is produced in a labour-intensive environment, Venkatramani added. While MDF is primarily used in making furniture, other applications are also growing at a significant rate, he said.

The wood panel maker does not expect any major change in the current quarter which is normally a slow starter.

Demand is expected to pick up from July and the company is expecting a 12%-15% volume growth in fiscal year 2024 over 2023.

While plywood is facing demand constraints due to a slowdown in residential real estate, Venkatramani expects the outlook for premium plywood to improve significantly over the next two to three years. The company is projecting an 8%-10% volume growth for plywood in fiscal year 2024.

The Gurugram-based company recently reported tepid fourth-quarter earnings, due to lower margins in MDF export volumes and a cut in export realization.

Greenpanel was one of the key beneficiaries during the COVID-19 pandemic as Indians appetite for readymade furniture grew rapidly.

This fueled the companys stock price, which rallied 26 times from May 2020 to April 2022, eclipsing the near two-fold rise in the Nifty Midcap 100 index (.NIFMDCP100) over the same period.

Overall, analysts currently have a bullish view on the stock, with eight out of 12 rating it a buy, according to Refinitiv Eikon data.

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