Company has announced Q2 results today. Awaiting views from learned members.
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Discl - invested
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Share Buyback ~ Public Announcement
Comment from Marcellus Investment Managers
Garware Technical Fibres’ (GTF’s) Board of Directors approved a buy-back of upto 1.52% of outstanding equity shares at Rs2,300 per share (which is a 6% premium to the current market price and a ~28% premium to last 6 months average traded price prior to the date of buy-back price announcement). At full subscription, this buyback would result in a total cash outflow of ~Rs730 mn. GTF already has net surplus cash of close to Rs3,730 mn as at September 30, 2020. Hence, despite returning the above amount back to shareholders, the net cash position would continue to remain healthy. Moreover, GTF operates an asset light business model with low capex intensity and lean working capital, hence internal cash accruals are expected to continue adding on further to the existing cash balance. In the absence of any significant opportunity, returning money to the shareholders is one of ideal measure to enhance shareholder value and we believe GTF has taken the right step.
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What about revenue growth. Why to invest in a small cap which just shows a revenue cagr of 10-11 percent
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Another nice innovation from Garware -
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Results are out.
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Found this article on GTFL’s corporate governance for those who are interested:
Disc- not holding
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Asset light nature of the business makes this company a pure ROCE play wherein even with marginal increase in sales yoy, there could be significant addition to the bottom line. However, there are few points still unknown: -
- Volume wise sales figures yoy and the trend therein
- The companies ability to pass on 100% raw material cost increases which helps to hold on to their margins; though this may not be a major issue on the export side
- Given the recent innovations, how soon the products need replacement giving rise to repeat orders
With the recent climb in prices, valuation seems stretched without visibilty on the above points.
Does any one have answers? If so, please share or point me to the same.
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Hi …
Can anyone throw some light on the typical life cycle of a Fishing net … as in …how long does it last ???
Basically …trying to access the repeat / replacement demand in this Industry.
Thanks in advance
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Depends on the type of net being used. Typical life of normal fishing nets is 3-4 yrs and for fishing cages is 8-12 yrs.
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GARFIBRES posted Q3FY22 Results.
Garware cited following reasons for compression in PAT YoY basis.
- Mark to market impact on other income.
- Raw materials cost inflation.
They will be able to pass on cost price with 2-3 months lag.
0a0d4a8b-df07-444f-811e-5d7c8f3b601c.pdf (1.3 MB)
Garw
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There appears to be some challenges in passing raw material cost increases on export front as well. Is it merely a contractual obligation to pass with a lag of one qtr?
It seems, they depend heavily on North American and Western European exports for their margins. Right now the ocean freights from India to these destinations are at high levels. This is the cost increase that they are unable to pass on to their customers. It is expected that ocean rates will start normalizing by H2 2022. With this the company should start experiencing lower costs and hence better margins.
This is my personal take.
Disclaimer - Invested.
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- Does the company have capex plans ?
- Will the revenues keep growing at 7-8% ?
- When was the latest concall or analyst meet/ investor presentation?
Please share if there is new information. Things have been quiet since 2021
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