This stock jumped 20% today
Delhi Delhi: Shares of Garware Hi-Tech Films (GHFL) on Thursday closed in an upper circuit of 20 per cent at Rs 2,895.10 on the BSE at 02:46 pm, which is also their record high. The surge came after the company reported a 102.2 per cent year-on-year (y-o-y) jump in profit after tax (PAT) in the June 2024 quarter (Q1FY25) due to improved product mix and better realisation of specialty products. In comparison, the BSE Sensex was down 0.45 per cent at 79,108. The company, a global manufacturer of Solar Control Films (SCF), Paint Protection Films (PPF) and other specialty polyester films, had posted a profit of Rs 43.7 crore in Q1FY24. Revenue grew 25 per cent year-on-year to Rs 474.50 crore on the back of sustained growth momentum in the SCF and PPF business. Earnings before interest, tax, depreciation and amortization (EBITDA) witnessed a commendable growth of 78.7 per cent year-on-year and 44.9 per cent sequentially to Rs 130 crore, led by the outperformance of the specialty segment. Margins improved to 27.4 per cent in Q1FY25 from 19.2 per cent in Q1FY24 and 20.1 per cent in Q4FY24. Over the past one year, GHFL’s market value has jumped 193 per cent, compared with a 20 per cent rise in the BSE Sensex. Ace investor Ashish Kacholia held 670,879 equity shares or a 2.89 per cent stake in the company at the end of the June quarter. Kacholia held 3.42 per cent (794,000 shares) at the end of the March quarter, shareholding pattern data shows.
GHFL is engaged in the manufacturing of polyester films, which are used in a wide range of end applications such as window tint applications, automobile paint protection films, packaging, electrical and motor and cable insulation, shrink film for label applications and architectural films, etc. GHFL has been a leading exporter of polyester films and holds patented technology for manufacturing UV-stable dyed films. These products are sold under the brand names ‘Sun Control Films’ and ‘Global Window Films’ in the domestic and export markets. The major applications include automobiles, FMCG and commercial/residential buildings. According to the management, GHFL has a market share of 8 per cent-10 per cent globally for sun-control films. GHFL earned 77.6 per cent of its revenues from export sales in FY24, up from 67.1 per cent in FY23, as the company focused on exploring new markets. North America is the largest market, where 46.4
per cent of revenues are generated. The company is also developing a niche market in India for its SCF and PPF products. The company is currently targeting the B2C model by setting up Garware Application Studios (GAS) in tier-1 and tier-2 cities and is associated with over 126 channel partners and over 650 OEM dealerships in India. According to Care Ratings, the Industrial Products Division (IPD) segment, which had recorded a sluggish performance in FY24 due to excess supply, is expected to improve as price realisation has started in this segment and margins are expected to improve going forward. GHFL has repaid all its term loans in FY24, resulting in the company becoming debt-free and the debt remains only as lease liability. Debt coverage indicators such as TD/GCA and interest coverage have improved to 0.08x and 25.23x (PY: 0.82x and 14.76x) respectively in FY24. The rating agency reasoned that credit metrics are expected to further improve in future as the company is generating stable profits and has no plans for debt-financed capital expenditure.
