HLE Glascoat - (Valuation gap with GMM Pfaudler)?

Hi @Vivek_6954

Thanks for sharing. However, I have flagged the post as the document contained in the post has content (capex table) which has been lifted from the original work done by contributers in the chemical industry and presented in the Goa meet 2019. Nothing wrong in lifting work but appropriate credits are necessary.



Is GMM Pfaudler way of manufacturing in anyway superio to thta of HLE? the enclosed video of manfg gives good kowledge


I saw this video of Swiss Glascoat
It seems the procedure is exactly similar



Chemical Unit at Maroli cannot remain operational in the long run. Hence it is necessary to wind down the chemical unit operations in a phased manner. Considering this background, the Board of Directors have decided not to fully restart the manufacturing operations and wind down the chemical manufacturing unit by 30th July, 2020.

Can someone tell me how much revenue loss is expected out of this move?

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Revenues of 45 Cr approx

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Chemical unit which is making around 45-50 Cr revenue and 15-16 cr EBIT.
It is being winded up in phased manner as current plant location is near to residential and dangerous.
I feel company will relocate it and wont like to loose business.

HLE Glascoat - CMP 777
Listed only in BSE
GMM Pfaudler and HLE Glascoat in same business of Glass Line Coated equipments being used by Chemical and Pharma industry.
GMM trades at 4284 (Exp.EPS 55+, PE 77
HLE Glascoat at 777 (Expected EPS 30 , PE 26 (promoters hold 74%).
Though GMM is a Pfaudler owned MNC a global leader valuation gap beteen these two looks high)
Seeing China’s restriction in chemical and API industry lot of capex is planned in India which assures good business for these 2 companies.

HLE Glascoats Looks good at current price of 777.

Sajan Didwania

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Rightly pointed expected PE is going to decrease after the results come out.

Regarding the PE difference, since we know the earnings are projected to grow, hence these high PE would be retained by GMM, what I am worried is GMM eating away the market share of HLE as has happened in the past!

Without a doubt everyone would agree that GMM has better brand name of HLE

Also there was a blast at one of the group companies of HLE, yashashvi-rasayan, leading to further revenue loss. Also shouldn’t the company as per SEBI regulation report such incidents to the exchange?

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Can you please share the data about market share between GMM and HLE over the past few years? In fact, just to share another data with you HLE’s GLE sales have increased by 43% while GMM’s sales have increased by 30% in 9MFY20 (sharing nine month’s data since full year financials for HLE are not out yet). Currently, the industry has its hands full and almost all the players in the industry have order book of 3 - 6 months including the unlisted players like Sachin Industries and Standard Glass Lining.

No doubt, GMM being a MNC has better reputation in the industry and even pricing is a bit higher compared to other companies. However, HLE also gets business from reputed companies like Divis, Bayer, Bharat group etc which reflects that its quality is also not that bad (I doubt if these companies will come to HLE just on the basis of lower pricing). Not sure if GMM will eat into the market share of HLE.

One interesting development which is happening in the pharma API industry is the kind of incentives Central Government is providing to API and intermediate companies to set up manufacturing facilities in India. Some recent announcements include providing incentives as well as providing grants to support common infrastructure for bulk drug parks. Two notifications attached for reference Production Linked Incentive Scheme for promotion of domestic ma (1).pdf (2.3 MB) Scheme for Promotion of Bulk Drug Parks_0.pdf (1.2 MB) Many large formulation companies have announced their plans to be more backward integrated by setting up API and intermediate manufacturing plants. Pharma City in Hyderabad has also picked up pace with state government also pretty serious about it. Pharma demand for GLE and allied products which had remained muted for past 2 - 3 years is also expected to pick up going forward as also mentioned in GMM’s conference call for FY20 results. Also, one important point to note here is that along with increase in GLE demand, HLE’s other product - filtration and drying product (where it is the market leader in India with more than 50% market share) should also see increased demand with API manufacturing coming up.

Yashashvi Rasayan is a group company of HLE and there are no major inter company transactions between them. They are not even cross holdings between the two group companies. There shouldn’t be any significant revenue loss for the company. The chemical unit which is part of HLE is different from Yashashvi Rasayan and has already been shut down and the land will be used for expansion of filter and drying products (the same was also stated in HLE’s AGM held last year). Not sure if any material development in a group company has to be disclosed to exchanges.

(Disclosure: Invested)


@ankitgupta great and important inputs. HLE i think is equally good and dominant player in Industry and together with GMM share around 75% market share.
GMM leads being
*a very old well established name locally and globally. HLE is less known comparatively in investment world but i think well accepted and known in industry.
2- Pflauder MNC holdings makes difference. But in HLE also Promoters holding of 74.25% gives good confidence.
3- GMM is leader in GLE while HLE leads in ANFD with 50% mkt share.
4-GMM leads in corporate communication where HLE has to start it.

Overall i expect being a Specialised industry, new entry looks not easy and HLE should catch up fast. Company is also under expansion.


Hi Ankit,

Thanks for the very informative post.

Could you please help summarizing the size of the opportunity from :

a) New capex demands from existing players
b) Potential new capex from new manufacturers
c) Replacement demand from GLE
d) Converted replacement demand from SS equipments

I am looking for a very high level ballpark estimates for next 3-5 year period. Thanks.

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Hi Rudra,

I think it is pretty difficult to categorize the growth driver for GLE and ANFD in the way you have categorized it. Its a B2B industry and such data will be difficult to get. But I think majority growth will be driven by new capex of existing/new players. In case of ANFD, some demand will also come from replacement of centrifugal filters and dryers to more advanced ANFD.

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Interesting company. They appear to be the only competition to GMMPfaudler and HLE. Their shares are not listed on the stock market.

hi @ankitgupta
Result is being declared on 20th June for March 20 Qtr.and annual.
What is result expectation for March 20 qtr.
Will company beat Dec.19 qtr result i.e Rev. 99 Cr
Op.Profit 18 Cr.
PBT 15 cr
PAT 11 Cr
All figures rounded off.

Hi Sajan,

Difficult to project performance on quarterly basis but should be decent I guess. Normally, Q4 is their best quarter going by historical numbers.




Result appears good for March 20 qtr and restated Annual FY 20.
Company managed to post almost same result as was in Dec.19 qtr even after around a week ten days lock down in March end would had affected workings.
Any expansion undergoing? any update?

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They have made some interesting notes, yes there is expansion, forgot what I read on this thread exactly.


Great analysis Ankit !
The results are out and they look quite decent. Pre-tax profits of both GMM and HLE were the same at 16 crores this quarter .

However what did well for HLE and saved the day was its chemical division. The margin of its Glass Lined Equipment division was quite disappointing

Earlier you had mentioned that the chemical division would be wind down. Do we have any idea If they would exit the business completely or would they relocate it to a different facility elsewhere ? Shutting it down would lead to loss of revenue and would also result in write off of plant and equipment. Ideally they should relocate and not loose the revenues and profit.

Also - any idea what the additional revenue would be when the existing site is converted into producing filteration and drying equipment ?

I am trying to work out a reasonable sales and profit forecast for FY 2021 and 2022



https://kiraninvestsandlearns.wordpress.com/2020/06/07/hle-glascoat-equipment-stock-analysis/ good blog post

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