01 Nov , 2021 By : Kanchan Joshi
GMM Pfaudler Ltd is a leading supplier of critical process equipment and systems to the global chemical and pharmaceutical industries. Domestic brokerage and research firm Anand Rathi has maintained its Buy rating on the stock on the back of strong traction from user industries, bright outlook.
GMM’s Q2 standalone results were mixed, revenue was up 34% year-on-year better than the brokerage's expectations on robust demand, while EBITDA margin in-line at 24.8%. Domestic and export demand was healthy with robust traction in pharma and chemicals.
“Order inflows were good and current capacity is fully booked; hence, the company is selective in picking orders and focusing on execution. Also, to address domestic demand and sourcing required from the international business, it is adding capacity at various plants," Anand Rathi stated.
The transition of Pfaudler International’s (PFI) German and Chinese facilities was faster than planned, with successful ramp-up of operations leading to more shipments, the note pointed.
It has tweaked its estimates based on the current order book and Q2 performance. The brokerage has maintained a Buy with a higher target price of Rs5,756 per share (earlier Rs5,645). Though, it sees Chinese manufacturers’ revival, less-than-expected demand or execution as key risks.
“With the PFI integration and greater cross selling efforts, domestic and international demand has increased considerably for all its businesses. Hence, it has realigned its businesses, ramping up production at several locations and focusing more on low-cost sourcing. It is also adding capacities in Hyderabad, Karamsad and Brazil, coupled with its acquisitions in the last one year," Anand Rathi's note added.
Money manager Saurabh Mukherjea is the Founder and Chief Investment Officer of Marcellus Investment Managers. GMM Pfaudler is part of Marcellus Investment's Little Champs Portfolio.
0 Comment