GMM Pfaudler hits 52-week high; up 26% in 1 week on strong growth outlook

The strong growth is expected owing to the increasing market size, investments, and exports in the pharmaceuticals, specialty chemicals, and agrochemical industries in the next 5 years

Shares of GMM Pfaudler hit a 52-week high of Rs 2,096 as they rallied 10 per cent on the BSE in Tuesday's intra-day trade amid heavy volumes. In the past one week, the stock of the industrial equipments company has surged 26 per cent on strong growth outlook. In comparison, the S&P BSE Sensex was down 0.37 per cent during the period.

At 12:37 pm, GMM Pfaudler was trading 9.6 per cent higher at Rs 2,083, as compared to 0.20 per cent rise in the S&P BSE Sensex. The average trading volumes on the counter jumped over four-fold with a combined 1.37 million equity shares having changed hands on the NSE and BSE. The stock had hit a record high of Rs 2,305 on August 12, 2020.

GMM Pfaudler is a leading supplier of engineered equipment and systems for critical applications in the chemical, pharmaceutical, food, and energy sectors to organisations around the globe.

According to the company, the government's focused thrust on positioning India as a global sourcing hub, a reliable alternative to China, on becoming self-reliant, coupled with its efforts in moving up the Global Ease of Business ranking is expected to attract investments into India. These efforts should open interesting growth opportunities for GMM Pfaudler.

"The strong growth is also expected owing to the increasing market size, investments, and exports in the pharmaceuticals, specialty chemicals, and agrochemical industries in the next 5 years," GMM Pfaudler said in its FY22 annual report.

The pharmaceuticals sector is expected to grow with key drivers being patent expiry, China +1 strategy, rising PE investments, and ebbing of regulatory risk. The Production Linked Incentive (PLI) scheme will further augment investments in the pharma sector. In the chemicals sector, growth is expected from a robust capex pipeline along with opportunities from a global footprint and value-chain integration, the company said.

In a separate development, on August 4, the board of GMM Pfaudler approved the acquisition of 46 per cent of the paid-up share capital of its existing overseas subsidiary, GMM International S.a.r.l from Pfaudler International S.a.r.l (part of the promoter group of the company) and Millars Concrete Technologies Private Limited (part of the promoter group of the company), which will result in the company owning 100 per cent of the Pfaudler International business.

ICRA notes that there would be some increase in the company’s debt levels at the consolidated level than their earlier expectations, which would moderate the debt coverage metrics.

"However, the increased scale of operations as well as expansion in profitability from the business shall support its credit profile. Further, the consolidation of the balance stake at GMM International S.a.r.l shall improve the company’s retained earnings," the rating agency said in its report August 16, 2022.