Garware Wall Ropes has posted an impressive result of 35% growth in net profits QoQ, even with revenue declining by 1.78% QoQ.
Garware Wall Ropes is in the synthetic polymer cordage industry. It manufactures fishing nets, sports nets, coated fabrics, geosynthetics etc. Company has recently ventured into defense sector in supplying camouflage nets, high altitude clothing etc.
Key Takeaways of Garware Wall Ropes’ Results:
- Revenue saw a subdued growth due to low international demand, but was compensated to some extent by increase in domestic demand.
- Operating Margin has improved drastically from 9.50% in Q1FY16 to 12.17% in Q1 current year. This was majorly due to lower cost of raw materials. cost of material consumed accounted for 37.04% of expenses for the current quarter, where as cost of materials was 52.03% of expenses.
- Synthetic cordage segment contributed 78.45% of the total revenue and has higher operating margin of 16.02% compared to fiber and industrial product segment, which contributed 21.55% revenue with a lower operating margin of 9.93%
- Other income increased by 3.7 times to 2.47 Crs for the current reported quarter.
Other Notes:
- The subsidiary, “Garware Environmental Sciences” is yet to commence its operations.
- The Management expects to see an increase in exports in coming months.
- Current long term credit rating by ICRA at AA- (upgraded on 14th July 2016 form A+).
- There was no mention of the potential defense project they might handle.
The stock closed 2.9% below the opening price on the results day, closing at 469.75. Results were announced post market hours.
Trailing P/E stands at 15.34 for the previous close price of Rs 469.75.
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