The Company : Garware Polyester
Limited (GPL) founded in the year 1957, is the
pioneer and the largest exporters of polyester films in India. GPL is the only
manufacture of sun control window films in India and a trend-setter in Sun
Control Film industry with a history of more than 3 decades of technological
development. The Company has four manufacturing
plants for Polyester Film and manufactures Film of thickness ranging from 10
micron to 350 micron.
The Company possesses Patented Technology for Dyed
Polyester Film in India and USA and is the Second Company in the world to possess
such Technology. The Company is already backward integrated through the
establishment of a Batch Process Polyester Chips plant which ensures a steady
stream of supply of chips for the Film Lines. The BOPP line set up by Company
in last year was part of the Company’s efforts to ensure forward integration
too. Thus Company’s strength is its integrated manufacturing facilities,
R&D Center and development of specialty products for various applications.
Products : The Company manufactures Bi-axially
oriented polyethylene terephthalate (BOPET) / Polyester Films, Sun Control
Films, BOPP Films, Thermal Lamination Films and Specialty Polyester Films of
high quality for a variety of end applications. GPL also manufactures the
premium grade heat rejection films based on the latest `Nano Technology’
developed in its in-house R&D facility center. The Company has introduced
Infrared rejection films which can reduce infrared heat up to 92%. It has also
developed the film to reduce the impact of mobile tower radiation.
Domestic Business : Growing Retail
sector, increasing preference towards packaged items, liberalization and rising
middleclass is expected to increase in consumption of Polyester Films thereby
adding to growth of this segment in the domestic market. Increased usage of
window films in offices, commercial buildings and malls will continue to add to
the growth of the Company’s business in the premium segment of window films.
GPL has well recognized brands and integrated manufacturing facilities which
are expected to augur well for the company’s future growth.
Global Business : Through its
subsidiaries situated in USA and UK the company has developed a wide network of
dedicated customers in Europe, USA, Far East, Middle East, Brazil, Australia,
China, Russia, New Zealand, Eastern Europe, Mexico and Africa. The quality of
GPL products is rated amongst the best in the world and the Company pays
special attention on customer service and satisfaction due to which the customer
base is consistent and increasing. The aim is to expand export base and
catapult international operations into a major growth driver. GPF is the
marketer of the brand ‘GLOBAL WINDOW FILMS’ which is registered in the US and
is one the most popular brands. The subsidiary is catering to Russia, Europe,
Asia-Pacific and Africa market film under the brand “Garware Sun Control”.
Future Strategy : The strategy is to
focus on the specialty films, launch new products, strengthen network and
Services and speed up brand building initiatives. Plans are afoot on a
marketing warpath, overhauling the product portfolio and penetrate newer
markets, launch aggressive advertisement campaigns. The shrink label
application film is very well stabilized in the market. With demand outlook for
High Shrink films remaining robust, the Company has plans to shift to the
specialty PET shrink Films, where it sees a tremendous opportunity. In thermal
film, GPL has developed Gold & Feather feel films. With foray into BOPP,
GPL has now become the only company in the segment which will be manufacturing
BOPET, Sun control Films, Thermal Lamination and BOPP.
Valuation : GPL, a six decade
old company with promoter holding of 61% (Zero Pledge) posted a Consolidated
total revenue for FY 17 of 925 Cr & Net Profit of 19.9 Cr on an equity of
23.23 Cr giving an EPS of Rs 8.57 per share. Borrowing stands at 267 Cr (Short
Term) and 19.9 Cr (Long Term) Finance cost remained 32 Cr. The company is
having 4 Lakh shares of Garware Wall Ropes (At current market price of 850 per
share, the value is close to 33 Cr)Freehold Land, Lease hold land and an entire
Building in Vile Parle, Mumbai, near Airport, the value of which should be many
times of current market cap (300 Cr).
If company can sell even part of its
mentioned asset and retire the entire debt than savings on interest alone directly
gets added to the bottom line, which can boost the EPS by 15 Rs per share. Debt
to Equity Ratio is 0.63, Debtor Days at 19.31. With bottoming out of the
Polyfilm Industry in near future and Softening of interest rates, and falling
Crude price, the profitability of the company with reducing debt, may improve
going forward by 15 to 20% CAGR for the next few years, plus the company is
back on dividend paying list after 5 years, that shows confidence of management
towards future growth of the company, hence Investor may study this asset rich
company for long term investment.
No comments:
Post a Comment