Garware-Wall Ropes Research Reports By Ambit Capital & Angel Broking

Research Report By Ambit Capital

Netting the benefits of innovation

GWRL is a niche player in technical textiles with a strong export franchise (46% of revenue). Expertise in fibre technology and polymer processing holds it in high repute among makers of high wear & tear and high impact products. Diversifying from a twine/rope manufacturer
(shipping) in FY94 to netting (fishing, sports, agri), GWRL is evolving into a leading player in geosynthetic (infra) and coated fabric (Defence). CMD Vayu is aggressive with focus on premiumisation, export and professionalising the team; hired Rehman as COO and host of professionals. Valuation of 25.8x FY16 (20x TTM) is inexpensive for a market leader given 18% RoE (FY16) and ~40% EPS CAGR over FY13-16, low capital intensity and GWRL’s balance sheet strength to invest for 20%+ growth. Rising exposure to GOE and attrition are key risks.

Valuations inexpensive for a market leader with strong balance sheet

Valuation of 20x TTM appears inexpensive when seen in light of GWRL’s low capital intensity, robust balance sheet and strong FCF to fund capex to double its revenue. This is critical given huge growth potential led by: (a) new product offerings in coated fabric, agriculture, geosynthetic, (b) new export markets; for instance fishing market in Japan; and (c) new innovation given GWRL’s focus on consistently launching valued-added products.

Research Report By Angel Broking

Going ahead, we expect GWRL to report a healthy top-line in anticipation of strong domestic as well as export sales. On the domestic front, we expect demand to pick up with an expected growth in the agriculture and fisheries segments in the country. Further, we expect the company to continue reporting strong numbers on the back of higher demand for aquaculture and sports products globally coupled with the company tapping new geographies.