Unnati Investment Management

Research Group
Management Development Institute
Garware Wall Ropes Limited
Current Market Price = 343.40
Market Cap = 751.42 Crore
52Week H/L=370.4/155.9
Absolute Rating BUY

Date:18th November 2015

Stock Details BSE (as on 18-Nov-2015)
14.55

P/E (TTM)

2.24

P/BV (TTM)

23.60

EPS (TTM)

Rs 3 (FV Rs. 10)

Dividend Paid (22-Sept-14)

OVERVIEW
Garware-Wall Ropes Limited is a public company domiciled in India and incorporated under the provisions of the
Companies Act, 1956. It was established in the year 1960 .Later its incorporated as a company in the year 1976( two
main promoters- Wall Industries Inc. of U.S.A and Garware Filament Corporation Pvt. Ltd, India). The Company is
engaged in manufacturing and selling various Technical textile products such as Ropes, Twine, Yarn, Fishnet, Other Nets
and Technical Textiles. It also provides solution to the infrastructure industries which include coastal protection, land
filling, etc. Its products are sold for deep sea fishing, aquaculture, shipping, agriculture, sports, and infrastructure,
transportation and defense applications. Company commands 70% market share of the domestic aquaculture market.

Segmental Breakdown of Revenue

Geographical Breakdown of Revenue

Fibre; 20%
Exports; 49%
Domestic; 51%
Synthetic cordage; 80%

Analyst: pg15vipul_g@mdi.ac.in

Unnati

INVESTMENT RATIONALE

Financial Performance - Consolidated

Strong R&D capabilities and product flexibilities:

Company has had strong R&D capabilities which have

enabled it to develop and supply customized fiber, rope
and netting products to its customers. This ability to
customize and develop long term relationships with the
customers provides the organization with a sustainable
competitive advantage. Company has thus successfully
forayed
into
geo-synthetics,
sports,
agriculture
protection and infrastructure netting business .

FY 2014-15
Total Income

786.60

% of Total
Income

(Rs. Cr )
% of Total
Income

FY 2013-14

100.0%

688.79

100.0%

4.37

0.6%

4.23

0.6%

COGS

363.46

46.2%

316.34

45.9%

Gross Profit

418.77

53.2%

368.23

53.5%

Other OPEX

Excise Duty

339.36

43.1%

305.90

44.4%

EBIDTA

79.42

10.1%

62.24

9.0%

Depreciation

12.39

1.6%

14.39

2.1%

EBIT

67.03

8.5%

47.94

7.0%

Interest

10.25

1.3%

12.83

1.9%

3.82

0.5%

4.10

0.6%

PBT

60.61

7.7%

39.2

5.7%

Agriculture protection, geo-synthetics and

infrastructure applications: With the push
towards high value and high yield agriculture
pushing poly-farming, railways and transmission
companies getting conscious of the utility of geosynthetics and the increasing construction activity
related pollution increasing the need for preventive
netting with a favorable order by NGT company
stands to gain in long term. Greater margins from
exports are an added advantage.

TAX

17.49

2.2%

12.45

1.8%

PAT

43.12

5.5%

26.75

3.9%

RESULTS HIGHLIGHTS

Total Income

Defense Opportunity: Products imported in the

technical textile space used for defense applications are
around Rs 1,200 crore. With GOI emphasis on Make in
India campaign and increasing defence expenditure, a
huge opportunity would be up for grabs. Thus GWR is
collaborating with Aerial Delivery Research and
Development Establishment, a wing of DRDO for
development of aerostats and radomes suitable for
military applications.

The companys net sales in Q2FY15 registered a Y-o-Y

growth of 5.68%, However the growth in EBIDTA and
Net profit was 24.68% and 41.52% on account of
growth into export business with higher margins.
Additional factors contributing to the growth in PAT
was the fact that company has reduced debt, thus
lower interest payments and a small fall in raw
material prices.
In addition company has forayed into new high value
agro, aquaculture and sports products.

SECTOR PERFORMANCE
The Indian textiles industry, currently estimated at
around US $108 billion, is expected to reach US $ 141
billion by 2021. Technical textile is the sunrise sector of
the textile industry. Domestic technical textile market
has grown from $11Bn in 2011 to $14 bn in 2015. At the
same time the industry is projected to grow to a size of
$87bn by 2025. Among these sportstech, packetech and
mobitech markets will report highest growth. In sight of
this projected investment in technical textiles would be
around $7bn. The GOI is taking special steps like of Rs

Analyst: pg15vipul_g@mdi.ac.in

Other Income

ROCE

18.5%

12.5%

ROE

14.7%

9.9%

Quarterly Performance - Consolidated

(Rs. Cr )

Q2 FY 15

% of Total
Income

Q2 FY 14

214.30

100.0%

202.77

100.0%

82.74

38.6%

94.16

46.4%

Gross Profit

131.56

61.4%

108.61

53.6%

Other OPEX

105.08

49.0%

87.38

43.1%

26.47

12.4%

21.23

10.5%

3.24

1.5%

2.81

1.4%

23.23

10.8%

17.09

8.4%

2.14

1.0%

2.95

1.5%

.34

0.2%

.45

0.2%

PBT

21.43

10.0%

15.92

7.9%

TAX

6.06

2.8%

5.06

2.5%

PAT

15.37

7.2%

10.86

5.4%

COGS

EBIDTA
Depreciation
EBIT
Interest
Other Income

Shareholding Pattern

Unnati

% of Total
Income

427 crores (US$ 69.12 million) for five years from 201415 for promotion of technical textiles in North-Eastern
regions.

NEWS
Company was awarded Institutional Award for R&D
Works by Central Board of Irrigation & Power (CBIP)
for its unmatched contribution to the geo-synthetics
sector. (Nov, 2015)

Company was awarded Top Exporter award for its

exceptional performance in the fish netting export
category for FY 13-14 and FY 14-15 by the
PLEXCONCIL, sponsored by MOC (Oct, 2015)

Company secured CE (European Conformity)

Comparison
certification for its Peer
Polypropelene
geotextile range of
YoY share price Growth
Companywhich would enable the companyCurrent
P/E
products
to further
(%)
strengthen its international presence by circulating
Welspun
108.45
11.8
its products across 30 countries of the European
Grasim
0.49
18.3
Economic Area (EEA). (Sep, 2015)
Arvind
-2.66
21.6

Vardhman
KEY
CONCERNS

72.21

9.9

Garware

89.72

14.5

Sep-15

Sep-14

60%
50%
40%
30%
20%
10%
0%

Low profitability margins: Company has historically

had low profit margins and operating leverage which

continues to stay so. The company has low inventory
turnover and asset turnover ratio. Therefore company
will become unprofitable with any disruption to its agro
or aquaculture businesses.

Contingent Liability: Company has increased

contingent liabilities from 179.24 crores in 2015 from
25.95 crores in 2013.

Currency fluctuations: As about 48% of the

companys revenue is from outside India, volatility in the
rupee can impact the companys topline, Especially when
company is targeting 65% revenues from exports
business in the near future.

Disclosures:

Analyst: pg15vipul_g@mdi.ac.in

Unnati