GMM Pfaudler Limited (GMM) is the Indian market leader in glass-lined (GL) steel equipment used in corrosive chemical processes of agrochemicals, specialty chemical and pharma sector. The company is seeing strong order inflow from the user industries which is likely to provide 20%+ growth outlook for next couple of years.
Outlook & Valuation: GMM is likely to maintain the 20%+ growth trajectory over FY18-20 backed by capacity expansion and cross selling of non-GL products to its clients. The stock is currently trading at 16.5x FY2020 EPS, which offers good opportunity to enter the stock. We are initiating coverage on GMM with a Buy recommendation and Target Price of `861 (20x FY2020E EPS), indicating an upside of ~21% from the current levels.
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