For Q4FY2018, GMM Pfaudler (GMM) posted a growth of 11%/14% yoy growth in revenue/ PAT amid ~300 bps margin expansion. The company is seeing good traction from its user industries like agrochemicals, which would drive 15-20% revenue growth in next two years.
Outlook and Valuation: We have fine tuned our earnings estimates in view of FY2018 results. We are expecting a CAGR of ~18%/20% in revenue/ earnings over FY18-20E. The stock has given 21% return since our initiation in April and is currently trading at 20x its FY2020 earnings which largely trails its earnings growth trajectory. Hence, we recommend Accumulate with a target price of `920 (22x FY2020E EPS).

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