YOY doesn’t look great. Revenue increased slightly but margins and PAT decreased.
1 Like
While the margins have come down a bit, I think these results are decent and more than baked in the valuation (20 PE). Additionally, with the PPF capacity coming online soon, I feel the downside is limited. Other export plays like Pokarna have had much sharper degrowth
1 Like
Agree. Results are not great but not bad either. Waiting for the concall now.. Management’s commentary from the investor presentation appears to have certainly changed from confidence to caution
4 Likes
Q1 FY26
Performance:
Concall Notes:
- PPF segment grew approximately 28% YoY.
- SunControl Films segment saw a revenue decline of approximately 7% YoY.
- Industrial Products division saw a decline of around 3% YoY, with shrink films sub-segment declining by nearly 29%.
- The operating environment is highly challenging due to two main factors: an unusual early monsoon in India affecting domestic demand, and significant uncertainty from escalating US tariffs.
- The tariff situation is dynamic, with competitors (including US-based ones) also impacted, leading to price increases across the market.
- The company remains debt-free with ₹700+ crores of cash and cash equivalents which provides ample headroom for ongoing capex initiatives (PPF line, TPU plant) and potential strategic investments.
- Increased employee and marketing costs are considered a strategic investment for long-term growth.
- The primary strategy is to mitigate the impact of US tariffs.
- Focus on growing in alternative geographies like Europe and the Middle East, where new manpower has been added.
- Implement cost-saving measures and improve operational efficiencies to absorb tariff pressures.
- Evaluate long-term strategic options to navigate a sustained high-tariff environment.
- Continue to leverage strong R&D and product differentiation as a competitive advantage.
- The company sells through channel partners as well as its own brands in the U.S.
- The business model relies on a long supply chain, which was a key channel for absorbing the initial 10% tariff impact.
- The company competes with U.S. manufacturers who also have backward integration, with some of their components sourced from China and Korea, making them also susceptible to tariffs.
- The company’s products have high switching costs due to technical specificities (color, IR rejection, VLT) and established trust with applicators over 20-25 years.
- A 10% tariff on US exports could have an impact of ₹100 crores on the bottom line annually, or ₹33 crores per quarter. In Q1, this was absorbed by the supply chain, with a net impact of only ₹3-4 crores.
- The company’s pricing in the U.S. market was 10-15% lower than local U.S. manufacturers before the recent tariff changes.
- Franchisee studios (GAS) in India provide 10-15% better margins than the normal distribution channel due to the sale of unique, high-end products like Titanium PPF.
- FY 26 is likely to be a challenging year due to tariff uncertainties and geopolitical tensions.
- Company has withdrawn all future guidance.
-
I would like to stay away from giving any guidance right now, because this is something, even if I say something, but we don’t know how much will be reversed or will happen.
-
- Strategic investments, including the second PPF line and the upcoming TPU plant, are on track.
- Hopeful something better will come out from the tariff situation.
- The early monsoon season impacted revenue by ₹25-30 crores (affecting SunControl and shrink films). Tariff uncertainty impacted IPD ordering by about ₹20 crores. The total impact was around ₹45 crores against the internal budget.
Shareholding:
Despite the challenging environment, institutions have started to accumulate the stock.
“The best time to buy quality stocks is during periods of pessimism or market distress.”
Disclaimer: Invested
15 Likes
Hey guys!!
What impact can we expect now from the 50 percent tariffs ?
2 Likes
In concall management has mentioned Tariff upto 15-16% was comfortable and another 10% they were working on by making optimisation. But additional 25% will be Big impact as in any business.
6 Likes
Given the US tariffs on PPF imports from India, has Garware explored setting up or partnering with a manufacturing base in tariff-neutral countries (such as Mexico under USMCA) to maintain competitiveness in the US market?
1 Like
U74999MH2012PTC235072_Report.pdf (2.2 MB)
I have attached a company report of Garware Industries Pvt Ltd from which they charge processing fees to the listed Garware Hitech company for 54 crores approx (fy 25). I ll request the team members to study and give their valuable insights on the same.
1 Like
I have prepared a graph comparison
of the rise in PAT and Executive Directors remuneration and Processing Charges over the last 10 years.
15 Likes
Q2FY26 Concall Notes
- Revenue -8% YOY, 15% QOQ.
- PAT -12% YOY, 10% QOQ.
- EBITDA Margin 23.4% vs 24.2% YOY. Q1 was 24.8%.
- PPF capacity doubled to 600 lakh square feet.
- TPU manufacturing line commissioning by October, 2027.
- 75% of capacity is designated for PPF & 25% of next gen film solutions.
- Expected improvement in EBITDA Margin by 1.5% - 2% upon completion.
- Garware Home Solutions (D2C) launched to capture demand for premium architectural films in the residential sector. Selling via e-commerce.
- Garware Application Studios (D2C) platform for premium paint protection and glazing films. On track to cross 300 studios by the end of FY26. Expanding into Tier-3 cities.
- Revenue Mix: Exports 76%, Domestic 24%.
- Sun Control Films (SCF):
- Revenue share increased from 42% to 50% YOY.
- Automotive SCF growth of 10 - 15%.
- Architectural SCF growth of 25 - 30%.
- Domestic growth of 35 - 40%.
- Pain Protection Films (PPF):
- Revenue share dropped from 31% to 25% YOY due to 50% tariff impact.
- Long term revenue share expected to stabilize between 30 - 35%.
- Industrial Product Division (IPD):
- 25% of revenue.
- Expected to decrease to 20% of total revenue in the long term.
- US Tariffs:
- Q2 reflected partial impact only. The full impact of the 50% tariff was primarily felt in September.
- The primary goal is not to lose customers. Passing cost to customers where possible and absorbing the rest.
- Customers have reduced inventory from 3 months to 1 - 1.5 months to maintain flexibility pending tariff clarity.
- The company is keeping inventory ready so that if tariffs are reduced, they can capture the upside immediately.
- Evaluated options to supply from other countries with favourable US trade deals.
- Legal consultations are complete. Ongoing discussions.
- Alternate supply chains would incur an additional cost of 20 - 25%.
- This plan will be activated if the 50% tariff persists permanently. It is currently on hold to avoid signing deals in panic.
- Management is optimistic about reports of a potential trade deal between Indian and US that could reduce tariffs down to 20% by November - December.
- US revenue is expected to remain flat or slightly grow despite the headwinds.
- If tariffs drop below 25%, confident of 22 - 25% EBITDA margins.
- If the 50% tariffs remain, management is prepared to maintain 20 - 25% margins on an overall basis using alternative arrangements.
- Long term Product Mix: SCF 45 - 50%, PPF 25 - 30%, IPD 15 - 20%.
Disclaimer: Invested & Biased.
12 Likes
3 Likes
Very good results considering various external factors at play.
Key points on capacity addition
- New SCF (Sun Control Film) Lamination Line - 1200LSF to be added to existing 4200 LSF capacity - 28-30% increase. Capex of 191 cr with 14 month timeline.
- PPF - doubled to 60 mn sq ft. Capacity already live
- TPU Linev(Oct’26) Estimated Capex of 118Cr with 360 LSF p.a. Capacity Output
Q4 Highlights
- Revenue: ₹597 Cr (Q4FY26) vs ₹548 Cr YoY
- EBITDA margin: 26.2% (Q4) vs 22% earlier - indicating operating leverage at play
- PAT growth: 18% YoY
FY26 Numbers:
- Revenue: ₹2120 Cr (flat YoY but high base)
- EBITDA: ₹500 Cr
- PAT: ₹338 Cr
Management guidance: 15% to 20% growth going forward.
Presentation: https://www.bseindia.com/xml-data/corpfiling/AttachLive/f4d4c219-31ce-4aef-b0ab-cfa9de17a23a.pdf
Capacity addition: https://www.bseindia.com/xml-data/corpfiling/AttachLive/8e0d85df-575e-4af3-b811-f6d271ca491b.pdf
3 Likes
Add: Backward Integration and Capacity Expansion:
-
TPU Manufacturing Line: The upcoming TPU (Thermoplastic Polyurethane) line is on track for commissioning by October 2026. This line is a critical backward integration move for their PPF segment, with 25% of capacity earmarked for next-generation products.
-
PPF Capacity: The company successfully doubled its PPF capacity to 600 LSF in September 2025, which is currently ramping up and improving manufacturing efficiencies.
-
Sun Control Film (SCF) Line: A newly announced SCF line is expected to be commissioned by Q1 FY28, which will further support long-term growth.
My notes from the conference call of Q4FY26.
BUSINESS OVERVIEW
The management works on the principles of innovation, integrity, and customer-backed innovation.
Despite the ongoing geopolitical tensions in the Middle East and trade deal uncertainty with tariffs being imposed, the company was able to maintain its market share across geographies, which shows the resilience of the company’s products and Moat of the business.
The company achieved its highest-ever revenue of ₹2,120 crores, growing by 0.5% YoY in FY26, EBITDA of ₹435 crores degrowing by 1.5% YoY, and highest-ever PAT of ₹338 crores, growing by 2% YoY.
The company has cash reserves of around ₹770 crores and remains debt-free.
The company’s overall sales comprise 55% through the company’s own brand, while the remaining 45% comes through private labels.
-
CLIENTS, MARKETS & GEOGRAPHY
The company has onboarded 4 new clients in the OEM segment, with 7 or more clients onboarded for the architectural segment, and is in discussion with 2 more OEM clients (product approved) to finalise the agreement.
The MENA region contributed around 6% to the overall sales for Q4FY26 of the company, and management expects it to grow by 25-30%, with the team being assembled from the top leadership of competitors.
The company has over 90+ countries from where it sources its raw materials, which helps mitigate supply chain risk. -
CAPACITY, CAPEX & UTILISATION
The TPU line, with an estimated capex of ₹118 crores and 360 LSF p.a. capacity output is expected to commence on time in October 2026, which will further lead to backward integration for the company.
The new SCF line of 1200 LSF P.A. at a cost of ₹192 crores is expected to commence by June 2027 (Q1FY28) and to start contributing during the same period. The plant is located at the same facility adjacent to the old plant. This plant is focused on both exports and the domestic market, with an expected growth contribution mix of 75% and 25% respectively.
The current capacity utilisation of SCF lines is 75-80% (expected to be fully utilised by next year), PPF lines are running at 85-89% utilisation levels, and TPU lines are running at optimum levels. -
SEGMENT-WISE PERFORMANCE & STRATEGY
The SCF segment contributed around 50%, the PPF segment contributed around 25%, and the IPD segment contributed around 25% to the FY26 revenue of the company.
Management is seeing tremendous growth in the SCF segment through Garware Home Solutions and the architectural business, which were started 2-3 years ago. As construction activities and awareness pick up, management expects this to be a key growth driver ahead.
The management is focusing on the D2C segment in both domestic and export markets and has started investing more in digital marketing to aid the initiative, with high traction being gained.
The Garware Application Studios have reached around 250 stores, and the management aims to reach 300+ stores soon. -
MARGINS & COST FACTORS
Management stated that the maximum impact of the tariff was felt by the company in Q3FY26, when both the topline and bottomline were impacted.
The B2C segment tends to have 30-40% higher margins compared to distributor margins, although it leads to increased costs through digital marketing and penetration strategies.
D2C has 25% higher margins as compared to the B2B segment of the company.
The company was able to pass on the raw material impact to customers.
The company clarified that the effective tariff impact post the US-India trade deal stands at only 10%, as the earlier proposed 50% tariff was removed. Earlier, under the previous administration, the company used to pay a normal tariff of 6.25%, which has now increased to 16% for exports to the USA. -
GUIDANCE & OUTLOOK
Management remains confident of achieving ₹2,500 crores of revenue in FY28 (conservative guidance), which will be around 18% growth over FY26, with EBITDA margins of 25% (+/-2%). Management expects margins to improve as the TPU line comes online in October. Management remains conservative.
9 Likes