After all that has happened in the past week or so, the stock is pretty close to the OFS price now. Expecting the supply overhang to taper off soon.
It is an assumption that investors who got on the wagon are not weary of the jerk
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your link is broken.
Here is the working link:
So, a lot more is yet to happen after the OFS. There would be a merger and perhaps another OFS in the next 3 years as per the concall.
While the whole transaction is being carried out in a complicated manner, the major concern here is corporate governance. Mr. Tarak is perhaps too immature to handle such situations as the minority stakeholders have been taken for a ride. Not because of the decline in price but because of the sheer suddenness and stealth which was deployed to carry out the deal.
There is definitely trading based on insider news based on SLB data which is not possible without senior management being either stupid or involved in the malpractice.
The stock is an avoid for me.
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If we go back in time i.e. before announcement of OFS, the only concern with GMM was it’s very high PE. Now with the OFS storm settling down and projections given by management in Concall of 25th September 2020, the following emerges.
GMM will be a 2000 cr turnover company Q3 onwards from 600 Cr at present. With EBITDA margin forecast of 13% this year , earnings will move upward 2.5- 3 times . It will bring down PE in range of 25-30 from present level of 75.
At PE of 25-30, GMM looks like a good bargain at Current prices.
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When you are estimating PE, it should be done by only taking earnings that are attributable to gmm from the global parent stake.
Hence only 54% of global parent profit should be added to india profits of gmm to arrive at the PE.
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In the concall md said that they eventually wish to buy the entire parent stake and also up their stake in gmm.
I feel this is their vision at the moment.
Reagrding ofs they did a mistake but it still was in terms with sebi guidelines.
Market punished them by bringing the shares to 3500.
Overall the company is good with sound fundamentals, need to track it closely for any other issue or maybe sebi investigation for slb matter.
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A good analysis of the events of past few days
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Good results but mostly on expected lines
Tracking position
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Marcellus report attached.
With the International acquisition the promoters might have bitten off more than they could chew.
there are units in China Italy and Germany these are giving half the profits of what the Indian arm is giving . the promoter is claiming that the family has put in their personal money because they strongly believe that they can turn these 3 units around.
In justification the only thing the promoter is saying that it believes!
there are no numbers to compare, any reference to International competition, the the kind of flow of revenue, profitability etc.
just because the Indian Arm is working so well does not mean that internationally they will be able to repeat the feat.
I don’t hv much history, but I feel international turnarounds are tough. Clients are different, labour challenges etc.
Experts pls comment.
Ps: OFS issue should be least of our worries.
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While International in general are tough there has to be growth beyond India at some point to meet steep share price growth expectations. Just Indian market alone cannot sustain long term revenue compounding. Are there risks involved. Ofcourse there are.
The rational for the acquisition are:
- Cost saving by shipping labour intensive jobs to India. For example have vessel making can be done in India given recent capacity expansion and to maintain quality of lining can be done closer to customer site in Germany.
- Sell GMM capacity via global Pfaudler network with increased reach.
- Access world class Pfaudler technology like interseal, exclusive ownership of lining technology, etc.
- GMM also has turned around MAVAG, another international acquisition in the past. Has a track record.
- GMM and Pfaudler were long term partners and known people for a long time. All majority shareholders still have skin in the game to make this a success.
While there are short term margin pressures, the company is positioned for growth. Execution needs to be watched.
OFS saga could have been better managed.
Disclosure: Invested & continue to hold. Likely will top-up from a lower average buy cost. Biased & see value now as price is close to or lower than OFS cost. NOT A RECOMMENDATION.
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GMM Pfaudler Limited has announced that it has successfully completed the transaction to acquire a majority stake of its parent, the Pfaudler Group.
Disclosure: Invested & continue to hold.
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From a long term perspective it will be good to understand, Are they only into original equipment or do they also also have spares / service business? what proportion of their business is spares/ service business?
Hi, I think in one of interview, Tarek Patel mentioned that Pfaulder revenue will be added into GMM Pfaulder listed entity from March onwards. I guess he mentioned around 2000 cr for the year. So we can expect addition of 500cr to Q4 revenue which might result in increase in EPS. I wanted to get my understanding confirmed by other people following the company.
From where you learned about this ?