100% agreed with you
This was posted to share investment thesis
Most off things r well covered in our thread only new I found … Some key scuttlebutt findings…
So share it .
Disclosure invested from lower level only by reading this thread
Thanks
Everything is in the Ambit report. I don’t know why Stalwart is putting up a public piece on GWRL now, after having invested in 2015 in the late 300s. I personally think its not ethical and also smacks of post-facto chest thumping / “me too” mindset.
2 Likes
A company having a global market, having unique products with not any
formidable competitors. Long term crude price trend down and derivatives
being their raw material…still trading at around 20 PE only…IMHO, the
market will rerate Garware-wall sooner than later…
1 Like
The reasons for PE rerating has been well summarised by ‘rvetri’:
- Raw material price low in the near future
- Unique products. Foray into defence.
- Less competition
- Global customer base
Since GWRL is seeing interest these days, my two cents:
All those wishing to enter now should likely wait till after Q4 results to assess the impact, if any, of forex movements. It may give a good entry point. The performance may theoretically be affected by the 5% movement in currency rates between USD / INR . Other goods exporters have also been negatively affected by currency movement and suffered loss of margin despite growth in sales up to 3-4%. One such example is Sutlej Textiles and Industries, which has stated that currency movements have affected realizations (though there may be other reasons too).
Edit: also wish to point out that GWRL has in the past managed to avoid impact of foreign currency movements.
If you are in similar profession what would you do to seek more clients in terms of sharing success stories ? Precisely thats what is being done. No one is forcing anyone to buy. Its as good as a news piece.
Hi
I find results quite good but what i do not understand is its balance sheet.
- In FY17, they have increased short term borrowing to 85 crs from 30 crs in Fy16, a Jump of Rs.55 crs , while they have cash of Rs.113 crs in balance sheet. Why?
- Trade payable has increased to Rs.192 crs from Rs.52 crs in Fy16 , huge jump of Rs.140 crs, while inventory and receivables have increased only by 25crs togather, what could be the reason for such huge jump in payables?
- Short term provisions in Fy16 - Rs.229 crs , consist of Rs.146.16 crs other provisions - no explanation. though it has reduced to Rs.153 crs in Fy17.
- Short term loans and advances have again increased in Fy 17 to 202 crs from Rs.176crs. major part consist of Advances recoverable in cash or in kind or for value to be received. there is no further explanation for it.
Can anyone help me on above points?
Thanks
Prashant
2 Likes
Is there any capacity expansion? Need to confirm with CS. Otherwise this can be a red flag. Need to dig more. Pune friends can help.
Annual Report should give a little more information on this. Otherwise I think anyone attending the AGM should raise these questions.
Hi as has been pointed out here, I am still unable to get a hold on their provisions (150+cr) in FY17.
Clearly the stock has been re-rated and has been featured in the Sohn conf too.
Any insights into the current B/S PnL as per FY 17 will be appreciated. Thanx!
What is this Baseline survey, Can you pl share it.
Thanks
The FY 17 B/S is a bit remarkable- it means company is now negative working cap considering their A/R + Inv < A/P. Any luck with management interviews to understand this huge jump in A/P?
Also, not sure why they need short term debt in the absence of working cap + capex spends.
Some points noted 
-
PAT has increased by 30% however the sales has gone up by 5 % . This could be because the company is enjoying some operating leverage .
-
The rise in profits could be also due to the fall in crude oil which has reduced the cost of materials considerably by 44 crores.
-
The net fixed asset turnover is falling since 2015 - Reduced from 4.91 to 4.31.
4 ) The firm has put money into investments to the extent of 105 crores .
- Th accounts payable increasing by 139 cr is also a question mark .
From the above we can conclude that the sales is deterioating and the management is not keen on doing any capex and so putting money into other investments . Also the profit increase is primarily due to crude price going down , so it’s a negative.
Please note I have not completed the analysis, so various other aspects once studied can change my opinion.
Disc: not invested.
1 Like
haha. good point!!!
Crude prices falling and raw material falling is exactly the reason why
Sales is going up slowly. The profit increasing inspite of sales increasing
by only 5% shows the pricing power of company and the brand equity. Look at
many other cos selling unbranded plastic compounds having crude derivative
as raw materials like ester…Sales and profits are falling…
1 Like
@rvetri
Crude oil is the main raw material - However in quarter 4 there has been a 55% increase in the crude price . However the gross margins still went up , which is a positive .
The sales has increased because they have penetrated into newer markets like Norway and Chile . Also added some new products.
You mentioned about the pricing power, which I have also mentioned in my 1st point as operating leverage.
1 Like
@Finrahul…
Agreed…instead of seeing QoQ, we should see how company has performed
when crude was at 120 D and when crude is at 50 D currently. Which is over
a 3 - 4 year band…In this back drop co has done extremely well to increase
sales…As customers always have a RM price pass through clause both when
RM prices go up or down… If you read Ambit’s latest research report on
Garware - all your doubts are well answered there…
3 Likes
Thanks Vetri
Ambit report hasnt covered some of the other red flags.
For eg.
what is this helicopter doing as an asset in Garware ?
2 Likes
Agreed…Good point…But how do we decide a helicopter is not a required
asset in Garware-walls business ??
2 Likes
6 Likes