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Garware Hi-Tech Films boast of a vertically integrated chips-to-films plant with multiple and adaptable manufacturing lines
HDFC Securities initiated the coverage of Garware Hi-Tech Films (GHL) with a target price of Rs 1,424. The company, for the past six decades, has been one of the leaders in the specialty polyester films industry, both in India as well as in international markets. It exports to over 80 countries that contribute almost three-fourth of its revenues. The company’s branded products have a strong recall in the US, European Union and Middle-East markets.
The brokerage believes that the company’s unique diversified product portfolio and constant focus on scaling-up of export markets along with a higher share of margin accretive value-add products and a strong bouquet of global patents have been the key growth drivers for the company.
Earlier, shares of the company have already delivered a robust return to investors in the long run. Take this: The scrip has gained 832% in the past five years and 1,385% in the last eight years.
Shareholding pattern
Promoters held 60.72% stake in the company as of June 30. On the other hand, the country’s biggest institutional investor Life Insurance Corporation of India had a 3.08% stake in the company, while well-known equity investor Ashish Kacholia held 2.58% stake.
HDFC Securities view
Commenting on GHL, the brokerage said that the company has transformed itself from a commoditised player mainly catering to industrial applications to a strong value-add products company with a higher focus on consumer products. It is among the few companies in the world that have a vertically integrated chips-to-films plant with multiple and adaptable manufacturing lines that can produce a highly flexible product mix.
GHL has a strong presence in both industrial and consumer products space and caters to varied applications in automobiles, packaging, architectural, solar control, electrical and thermal insulations.
“We believe, the company is at an inflection point and we have a positive view on the stock on the back of commissioning of new paint protection films (PPF) plant, capacity expansion of the laminate line from current 2400 lakhs Sqft/ per annum to 4200 lakhs sqft per annum by March 2022. Higher growth in consumer products and value-add segment to be margin accretive for the company and aggressive management guidance of achieving a milestone of Rs 1,500 crore of revenue by FY23 which translates into revenue growth of 23% CAGR over FY21-23E,” HDFC Securities said.