For Q3FY2019, GMM Pfaudler (GMM) posted a yoy growth of 33%/48% in revenue/ PAT amid ~25 bps margin expansion. The company is seeing good traction from its user industries like agrochemicals and pharmaceuticals which are seeing robust capex owing to slowdown in China.

We have maintained earnings estimates for robust growth outlook from the user industries. We are expecting a CAGR of ~21%/28% in revenue/ earnings over FY18-20E. The stock has given 54% return since our initiation in April and is currently trading at 23x its FY2020 earnings which still looks attractive given its robust earnings growth trajectory. Hence, we recommend Accumulate with a target price of `1200 (25x FY2020E EPS).

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