Garware Hi-Tech Films Ltd. Reports Resilient Q1FY24 Performance Driven by Specialized Films Growth

Company Description:

Garware Hi-Tech Films Ltd., a key player in the Containers & Packaging sector, has showcased resilience and growth in its Q1FY24 results. With a focus on specialized films, the company maintains a commitment to financial prudence and operational excellence.

Financial Highlights:

– Revenue: The company reported a consolidated revenue of Rs 380 crore in Q1FY24, marking a growth of 2.7% compared to Rs 370 crore in the corresponding quarter of the previous year (Q1FY23).

– EBITDA: The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) stood at Rs 73 crore in Q1FY24, reflecting a 2.9% increase over the EBITDA of Rs 71 crore in Q1FY23.

– Cash Profit: Garware Hi-Tech Films achieved a cash profit of Rs 54 crore in Q1FY24, showcasing a robust growth of 3.3% from the cash profit of Rs 52 crore in Q1FY23.

– Profit Before Tax (PBT): The Profit Before Tax (PBT) for Q1FY24 reached Rs 59 crore, registering a marginal decrease of 1% compared to the PBT of the corresponding period in the previous year.

– Profit After Tax (PAT): PAT for Q1FY24 stood at Rs 44 crore, showing a slight decline of 1.9% in comparison to the PAT of Rs 43 crore in Q1FY23.

– Earnings Per Share (EPS): The Earnings Per Share (EPS) was reported as Rs 18.81 in Q1FY24, compared to Rs 19.17 in Q1FY23.

– Debt Reduction: A prudent approach to debt management was demonstrated by the prepayment of Rs 50 crore of debt during the quarter, leading to the current total debt of Rs 73 crore.

Business Updates:

Amidst economic shifts, the company reported consolidated revenues of Rs 380 crores, marking a growth of 2.7% compared to the corresponding period in the previous year. This growth was notably propelled by an upswing in PPF volumes in both domestic and export markets. Despite subdued demand in SCF, the company’s strategic focus on specialized films has positioned it for superior growth relative to the poly film industry’s current challenge of overcapacity.

The robust performance was further reflected in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of Rs. 73 crores, signifying a 2.9% increase from the same period last year. This enhancement was attributed to amplified PPF volumes and judicious management of operational expenses. Nonetheless, the company encountered challenges stemming from geopolitical tensions and destocking, leading to lower-than-anticipated SCF volume growth in key markets.

GHFL’s strategic focus remains the expansion of its specialized film segments. The Solar Control Film (SCF) segment, despite an underpenetrated Indian market, displayed strong uptake, prompting the re-introduction of the ‘Safety Glazing’ window film in the domestic market. The film’s unique attributes of UV and heat rejection, improved fuel efficiency, and safety enhancement are poised to drive its market presence.

Furthermore, the Paint Protection Film (PPF) segment exhibited robust demand, both domestically and in export markets, underscoring the company’s capacity utilization strategy for the forthcoming quarters. The emphasis on education and awareness among end-customers, particularly in the premium automotive sector and the burgeoning electric vehicle (EV) segment, is expected to bolster sales. Moreover, a dedicated training program for PPF applicators ensures consistent application, while the company’s global reach is highlighted by approximately 80% of PPF products being exported to key international markets.

GHFL’s commitment to environmentally friendly solutions is exemplified by the Shrink Film segment’s growth. Focused efforts in the domestic market and the shift from PVC-based films to recyclable PET-based shrink films have significantly expanded business prospects. GHFL’s innovative approach and control over the production cycle enable it to provide tailor-made, high-quality shrink films aligned with market preferences.

Commenting on the results, Dr S B Garware, Chairman and Managing Director, said, “GHFL has embarked on a major transformation journey with speciality films, expanded distribution channels and a customer‐centric approach at its core. Building on the initiatives undertaken a few years ago, the company has effectively positioned itself as a leading manufacturer and exporter of Solar Control Films, Paint Protection Films, and other specialised polyester films. In addition, the commitment to financial improvement is reflected in a strong balance sheet with a healthy cash reserve and a remarkable achievement of zero net debt.”
Ms Monika Garware, Vice Chairman and Joint Managing Director added, “Improving our product mix towards value‐added films remains a top priority, supported by expected macroeconomic improvements in key markets such as the US and Europe. While the poly‐film industry faces challenges from overcapacity and oversupply, GHFL’s outstanding performance is attributed to its commitment to value‐added products and its ability to navigate through global macroeconomic adversity. These high‐value‐added speciality films account for a significant 80% of the company’s total revenues, playing a key role in maintaining revenue stability and driving profitability.”