Garware Wall Ropes may test Rs 390, says Mayuresh Joshi

Mayuresh Joshi of Angel Broking told CNBC-TV18, "Garware Wall Ropes is a small midcap company into technical textiles more or less to do with two business divisions of synthetic cordage and the industrial fibre and products division. So, it caters to a whole lot of industries; aqua culture, agriculture and sports. If you look at numbers in the quarters gone by it has been an impressive performance, at least on the topline and EBITDA front. Topline has grown by 20 percent, EBITDA margins at 10.8 percent in the quarter gone by and clearly the input costs because they derive a lot of input costs from high density polyethylene and Nylon which have seen significant correction, those are ultimately linked to crude oil derivatives.""You are going to see a massive amount of correction on that front which will aid EBITDA going forward. Clearly the export component at 50 percent the company expects that to increase around 65 percent odd. But a lot of this demand on sporting nets, tennis nets actually is coming from export markets and US markets in particular. So, that will probbaly ensure that the debt of Rs 45 crore, the company has actually got down from Rs 140 crore and the interest payment from Rs 70 crore to Rs 10 crore will keep on coming down. That will improve the cash flows for these companies. The EBITDA margin should sustain between 10 - 11 percent," he said."Clearly from a valuation perspective our take is a 12 percent topline growth and 18 percent bottomline growth and valuations close to 12.1 times seems attractive to us. So, a target of Rs 390 over the next 9-12 months on Garware Wall Ropes is not ruled out."