The technical textiles company has been generating more revenue from domestic clients than from its exports. The company operates on B2B model. The revenue share of domestic to foreign revenue currently stands at 60:40. Earlier last quarter it was 55:45. Good monsoons coupled with strong demand has pushed product sales in its fisheries and agriculture segment. Garware currently generates nearly 85% of its revenue from synthetic cordages and rest of it from industrial products. The firm has been showing a consistent growth trend.
The synthetic cordage company saw a revenue increase of 8.4% YoY, with a net profit increase of 69.3%. The increased profits was mainly on account of improved operating margin from 10.84% in Q2FY16 to 15.67% in the current quarter. The cost of raw materials consumed has come down and have been the major supporting factor for improved margins. The company as such doesn’t have any long term loans outstanding in its balance sheet.
Garware has two strategies for growth, the first being to expand into newer markets where there is more potential and other is to develop new applications which provides higher efficiency to end users. The new applications have been major growth factor for the company in the domestic market.
Garware also has more than 20% market share in sports net for Europe and American market. The company currently is in comfortable position in terms of sports product and has established client base.
Even at current price of Rs 550, Garware stock is trading at a trailing P/E of 15.49.