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Small & Midcap Mantra | This small cap company owned by Ashish Kacholia and LIC, rallies over 400% in last one year

It recorded the highest ever consolidated revenues of Rs 989.03 crore in FY21, growing 6.9 % YoY, due to improved product and market mix

June 08, 2021 / 12:11 PM IST
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Garware Hi-Tech Films, earlier known as Garware Polyester (GPL), turned out to be the great multibagger as its stock surged more than 400 percent in the last one year, outshining not only the Small cap index, but also benchmark and other sectoral indices.

The largest polyester films exporter closed at Rs 909.85 on June 6, surging 422 percent in the last year to outshine the BSE Smallcap index that rallied 103 percent and the BSE Sensex that gained 52 percent in the same period.

The product line of the company includes an exclusive range of films that cater to the solar control industry, shrink label and packaging industry, reprographic industry, electrical and thermal insulation, among many other important applications.

The company's manufacturing facility in Aurangabad is vertically integrated with the production of polyester chips, which is the raw material used to manufacture polyester films with four independent production lines.

"The sector seems to have good potential from mid to long term with the utility of its products becoming critical," Gaurav Garg, Head of Research at CapitalVia Global Research, told Moneycontrol.


Marquee investor Ashish Kacholia held 2.03 percent stake in Garware, while other individual investors, Hardik B Patel and Minal Bharat Patel, have 2.27 percent and 6.48 percent stake in the company respectively, as per the shareholding pattern of March 2021 quarter.

State-owned Life Insurance Corporation of India (LIC) held 3.67 percent stake in the company. All these investors together have 15 percent shareholding in Garware, out of the 39 percent public shareholding.

Points out Gaurav Garg: "The commodity chemical sector has been on the rise in the past couple of months. The feature, which has attracted the attention of so many investors is that the stock was quite undervalued as compared to its peers, the (PE) (trailing twelve months-TTM) of Garware is 16.23 as compared to market leader Deepak Nitrate, which has PE of 31.3."

"The company has a price to book value of 1.33, which is quite attractive and the promoter holding of 60.72 percent and debt to equity (annual) of 0.1 shows the company is relatively less levered and with limited shares in the public domain, is driving the price up," he adds.

"Unique products, global patents, focus on value added films, higher share of consumer products, focus on export markets, etc. have further improved the company financial results," Garware said in a statement.

The company recorded the highest ever consolidated revenues of Rs 989.03 crore in FY21, growing 6.9 percent year-on-year (YoY), due to improved product mix and market mix.

Exports, which contributed 74 percent to revenue, increased by 15.8 percent during the same period. "The company aims to expand the window films category across safety, architectural and front window screen glasses," said Garware Hi-Tech Films in its BSE filing.

Its consolidated profit in Q4FY21 jumped 51 percent to Rs 31.80 crore and revenue grew by 30.4 percent to Rs 287.74 crore, compared to the year-ago period.

"PAT has increased by 217 percent quarter-on-quarter (QoQ) underscoring our focus on world-class execution and operational excellence and satisfied with our robust third quarter performance. We continue our focus on growth and see a strong and secure future for the organization given this growth approach," said S B Garware, Chairman and Managing Director, GPL.

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sunil Shankar Matkar
first published: Jun 8, 2021 11:51 am

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