GMM Pfaudler has been in the news for the wrong reasons with respect to its crashing share price. The share price fell from almost ₹7000 level to current 3500 levels.
But if you look at the quarterly performance, after 3 quarters of stagnation, the revenue grew by almost 22%. To add to this the margins improved handsomely. This was mainly on account of 2 new gas furnace coming on stream and higher amount of glass lined equipment sales. At full capacity these 2 furnace will manufacture 500 glass lined equipments.
Going forward their acquisition of De Dietrich Process Systems India at Hyderabad will also start contributing to the growth. De Dietrich has a capacity to manufacture 400 units of glass lined equipment.
The biggest problem faced by the company was capacity constraint but the on time coming up of 2 new gas furnace & acquisition of De Dietrich gives them comfort of keep up with the growth.
Also, the acquisition of their US based parent company i.e. Pfaudler Inc will open many new doors for the company. GMM Pfaulder will be acquiring 54% in the parent and 26% will be bought by the promoters of GMM in their personal capacity. Remaining 20% will be held by the current private equity company. The transaction is expected to close by end December 2020.
Their order book at the end of the quarter stood at ₹350cr & 1100+ glass lined equipment. The order book for their subsidiary also looks good at 20Mn Swiss franc. Company is expecting the current growth to continue atleast for the next 2 quarters.
Coming to the valuation, the company is still very richly valued.
Good article to read on GMM Pfaudler’s current transactions: Link
You can read my analysis on GMM Pfaudler & Q4FY20 result analysis by following the below links: