GMM Pfaudler Ltd. share price target

GMM's GL sales volume in FY17 was ~1400 vessels with capacity utilization of 75%. GMM is undertaken a debottlenecking exercise and aims to achieve 2,100 GL capacity volume in FY19. During Q4FY18 capacity utilization level was at 80% level given the strong order book (8 months), for full year FY18 GL volume stood at 1500 vessels (80% utilization), Management targeting to achieve 1800 vessels in by the end of FY19 (20% volume growth from FY18). The Company's GL business grew at 10% CAGR during FY14-17. We estimate the same growth to continue going forward on the back of >10% growth in end-user industries ( Pharma 10-12 %, Chemicals 12-14%; Most of the chemical players are in capacity expansion mode). Revenue contribution from pharmaceutical industry restricted to 30% during Q4FY18 compared to more than half of GL revenue due to the challenging environment in the sector and increased order from chemicals sector. Management expects in FY19, recovery in the pharmaceutical sector as capex cycle to get the better pace. Currently, The Company had 5 furnaces...

For Q4FY2018, GMM Pfaudler (GMM) posted a growth of 11%/14% yoy growth in revenue/ PAT amid ~300 bps margin expansion. The company is seeing good traction from its user industries like agrochemicals, which would drive 15-20% revenue growth in next two years. Outlook and Valuation: We have fine tuned our earnings estimates in view of FY201..

GMM Pfaudler Limited (GMM) is the Indian market leader in glass-lined (GL) steel equipment used in corrosive chemical processes of agrochemicals, specialty chemical and pharma sector. The company is seeing strong order inflow from the user industries which is likely to provide 20%+ growth outlook for next couple of years. Outlook & Va..

GMM Pfaudler is well positioned in the industry owing to robust order backlog, high entry barriers and market leadership position in GLE business, strong brand name, and sticky clientele, growing Non-GLE business, parent and subsidiary support, strong balance sheet

GMM Pfaudler Ltd (GMM) in 2QFY18 posted revenues of Rs 76 Cr. (up 21% Y-o-Y, up 11% Q-o-Q) due to stellar growth in Non-Glass Line Equipments (Heavy Engineering) segment.

GMM Pfaudler Ltd (GMM) in 1QFY18 posted revenues of Rs 69 Cr. (up 21% Y-o-Y, down 13% Q-o-Q) due to stellar growth in Non-Glass Line Equipments (Heavy Engineering and Proprietary products) segment.

GMM Pfaudler Ltd (GMM) in 4QFY17 posted revenues of Rs 79.5 Cr. (up 34% Y-o-Y, up 21% Q-o-Q) due to consistent growth in both Glass Line Equipments (GLE) and Non-GLE (Heavy Engineering and Proprietary products) segments.

GMM Pfaudler is the market leader in manufacturing of glass line equipments (>50% market share), this constitutes ~63% (Rs. 184 Cr.) of its revenues on a consolidated basis. We initiate coverage with BUY rating with a target price of Rs.634 i.e. ~19% upside (implies 24x FY19E)