Anand Rathi rises on this chemical-linked stock, raises target price

GMM’s Q2 standalone results were mixed, with revenue up 34% year-over-year, better than the brokerage’s expectations on strong demand, while EBITDA margin in-line was up 24.8%. Domestic and export demand was healthy with strong traction in pharma and chemicals.

“The order flow was good and the current capacity is fully booked; Therefore, the company is selective in taking orders and focusing on execution. Besides, to meet the domestic demand and sourcing required from international trade, it is adding capacity at various plants,” said Anand Rathi.

The note noted that the transition of Pfaudler International (PFI)’s German and Chinese facilities was faster than planned, with the successful ramp-up of operations leading to more shipments.

It has revised its estimates based on the current order book and second quarter performance. The brokerage has maintained a buy with a high target price of ₹5,756 per share (earlier .) ₹5,645). However, it sees revival, lower-than-expected demand or performance as key risks to Chinese manufacturers.

“With PFI integration and more cross selling efforts, there has been a significant increase in domestic and international demand for all its businesses. Therefore, it has realigned its businesses, increased production at multiple locations and focused more on low-cost sourcing. It is also adding capacity in Hyderabad, Karamsad and Brazil with its acquisitions in the last one year.”

Money manager Saurabh Mukherjee is the founder and chief investment officer of Marcellus Investment Managers. GMM is part of Pfaudler Marcellus Investments Little Champs Portfolio.

The views and recommendations given above are those of individual analysts or broking companies and not of Mint.