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Garware Wall Ropes (GWRL)s 2QFY2016 results outperformed our estimates on the bottom-line front. The companys top-line for the quarter grew by a subdued 6% yoy. On the operating front, the company reported margin improvement, primarily on account of lower raw material costs. Further, on the bottom-line front, the company reported strong growth on account of a favorable operating performance and lower interest costs. Subdued top-line growth: The company’s top-line grew by ~6% yoy to ~Rs214cr (which is below our estimates of ~ Rs232cr), mainly due to lower growth in the Synthetic Cordage segment (of ~3% to Rs180cr). The Fibre & Industrial Products segment reported a strong growth of ~14% to Rs39cr. PAT grew ~42% yoy: The reported net profit grew by ~42% yoy to ~Rs15.4cr (our estimate was of ~Rs12.7cr) on account of falling material prices and lower interest costs with the company having repaid a significant amount of its debt in FY2015. Outlook and valuation: Going ahead, we expect GWRL to report a top-line CAGR of ~11% over FY2015-17E to ~Rs967cr owing to strong domestic as well as export sales. On the bottom-line front, we expect the company to report ~20% CAGR over FY2015-17E on account of expansion in operating margin (due to lower material prices and higher exports, which is a high margin business). Further, the company has reduced its debt significantly which will lead to cost savings. Hence, we recommend a Buy rating on the stock with a target price of Rs423.Download Full Report
|Investment Period||12 Months|
|MCAP BSE (Rs in Cr)||1,156.47|
|MCAP NSE (Rs in Cr)||1,158.55|
|Div Yield (%)||0.62|
Shareholding Pattern (%)
|Public & Others||33.0|