Century Plyboards reported a strong Q2, achieving their best-ever quarterly sales, EBITDA and profit after tax (PAT). Keshav Bhajanka, executive director of the company, spoke to CNBC-TV18 with their earnings fineprint.

Bhajanka said, “It has been a very good H1 (first half) as the base was low. In the last quarter, we had done historically, our best set of numbers. We are quite bullish, if you look at real estate data, that is also very positive. It looks like the housing sector is reviving and that bodes very well for all building material companies, in particular, I think that bodes very well for Century Plyboards for H2.”

He added, “Our objective is to grow sequentially, having said that, Q3 because of the lower number of working days is typically a little bit weaker than Q2. However, our objective will be to maintain the Q2 numbers in Q3 and perhaps build on the same in Q4.”

On margins and higher input cost, Bhajanka said, “Raw material costs have really shot up for us as well across the building material spectrum. But having said that, yes, operational leverage helps. One thing we have been able to do is to leverage our position as the market leader to pass on the price increase perhaps a little faster to the market.”

Costs have shot up in the last couple of months as well and the company is attempting to pass on the same, he said.

There might be slight margin pressure in Q3 but the company's objective will be to maintain margins at 16-17 percent in plywood and laminates and 25 percent-plus in medium-density fibreboard (MDF) and particleboard, going forward.

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On expansion, he said, “Punjab unit is going to be a 350 cubic meter expansion that is going to be close to 60 percent of our current MDF capacity. That has a capex of Rs 250 crore. We are also in very advanced stages with an expansion in the south, which is going to be closer to 700 cubic meter. So, I think both of these expansions put together would be almost 200 percent increase in our total MDF capacity that is going to be substantial, going forward.”

He added, “Other than that we are already working on expansion in laminate as well over the course of next year. In plywood as you know we have already added a lot of ancillary equipment so as to increase our overall production. So, I think in all the segments, we have been taking steps to augment capacity, the major capex is going to go towards MDF, that that is already planned and it is under execution.”

On realisations and volumes, Bhajanka said, “In terms of realisations, cost pressures are there and we will be looking at further price increases in the near future. So realisations should increase from this point forward. In terms of volumes, our attempt is going to be to at least maintain volumes in the current quarter and then build on the same going forward.”

For full management commentary, watch the video.

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(Edited by : Bivekananda Biswas)

First Published:Nov 3, 2021 3:10 PM IST