Garware-Wall Ropes Q2FY17: Firstcall are overweight for medium to long term investment

Firstcall India Equity | May 9, 2016, midnight


SYNOPSIS

  • Garware-Wall Ropes Ltd is a leading player in Technical Textiles, specializing in providing customized solutions to the cordage and infrastructure industry worldwide.
  • Revenue for the 2nd quarter rose by 8.47% to Rs. 2324.50 million from Rs. 2142.99 million, when compared with the prior year period.
  • The company’s net profit jumps to Rs. 260.12 million in Q2 FY17 against Rs. 153.68 million in the corresponding quarter ending of previous year, an increase of 69.26%.
  • During the 2nd quarter, EBIDTA stood at Rs. 432.94 million as against Rs. 268.11 million in the corresponding period of the previous year, up by 61.48%.
  • Profit before tax (PBT) stood at Rs. 381.42 million in Q2 FY17 against Rs. 214.30 million in the corresponding quarter of the previous year, up by 77.98%.
  • EPS for Q2 FY17 is at Rs. 1189; this is a growth of 69.26% over Q2 FY16.
  • For six month period of FY17, net profit stood at Rs. 457.74 million as compared to Rs. 299.91 million for the Six month ended of previous financial year.
  • In H1 FY17, Net sales stood at Rs. 4575.15 million as compared to Rs. 4536.15 million in H1 FY16.
  • Net sales and PAT of the company are expected to grow at a CAGR of 10% and 39% over 2015 to 2018E respectively.


OUTLOOK AND CONCLUSION

  • At the current market price of Rs. 550.40, the stock P/E ratio is at 13.74 x FY17E and 12.12 x FY18E respectively.
  • Earning per share (EPS) of the company for the earnings for FY17E and FY18E is seen at Rs. 40.05 and Rs. 45.39 respectively.
  • Net sales and PAT of the company are expected to grow at a CAGR of 10% and 39% over 2015 to 2018E respectively.
  • On the basis of EV/EBITDA, the stock trades at 7.60 x for FY17E and 6.74 X for FY18E.
  • Price to Book Value of the stock is expected to be at 2.66 x and 2.24 x for FY17E and FY18E respectively.
  • Hence, we say that, we are Overweight in this particular scrip for Medium to Long term investment.

 

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