Cosmo Films Limited

Q3 FY 2022 Review

Cosmo Films Limited reported net revenue of ₹770.53 crores for the quarter ended December 31, 2021, as compared to ₹572.31 cores crores for the quarter ended December 31, 2020. EBIT and Profit After Tax were ₹145.15 crores and ₹104.42 crores for the quarter ended, December 31, 2021, as compared to ₹97.31 crores and ₹62.75 crores during the corresponding quarter of the previous year.

Cosmo Films Limited - Investment Summary

Cosmo Films Limited - Overview

• Cosmo Films Limited is engaged in the manufacturing of Bi-axially Oriented Polypropylene Limited (BOPP).

• It has diversified in Specialty Films, Polymer Chemicals, and the digital-first, Pet Care business.

• The company has launched the Pet Care business vertical with a simultaneous launch of the website, first mobile van, and its flagship stores during Q2FY2022, under the brand name “Zigly”.

• The company operates across four strategically located manufacturing facilities in Maharashtra, Gujarat, and South Korea.

Cosmo Films Limited - Recommendation Rationale

• Cosmo Films Limited is the largest exporter of BOPP Films in India and one of the largest BOPP manufacturers in the world with the capacity of 1,96,000 tons per annum.

• The company also has global leadership in the high-value thermal lamination and industrial application films segment. It holds a dominant position in another niche of high-end specialty films such as labels, synthetic paper, and digital thermal print (DTP) films in India.

• It has a diversified revenue profile with 62% contribution from specialty films and 38% from commodity films. Over the years, the company has developed a strong product portfolio across Packaging Films (55% of overall Revenue), Lamination Films (20%), Label Films (13%), and Industrial Films (13%).

• The company has been gradually moving towards the value-added segment with specialty products contributing to around 62% of revenue in fiscal 2021 from 47% in fiscal 2019 supported by investment in research and development and Capex for adding value-added products. Customized requirements of clients and higher value addition catered by specialty products have resulted in sustained improvement in contribution per kilogram and operating profitability. Improved operating profitability, prudent capacity addition and ramp-up of new capacities will ensure return on capital employed remaining over 15% in the medium term.

• In the first nine months of FY 2022, the company’s revenue increased by 37% to ₹2217.50 crores, as compared to the previous year at ₹1613.38 crores. Profit after Tax increased by 78% to ₹288.44 crores, as compared to the previous year at ₹162.45 crores.

• The company has a good client base which includes Pepsi, Colgate, Coca-Cola, Nestle, Avery Dennison, and many more.

• Company’s ROCE is 27.25%, ROE is 27.74% and Debt to Equity is 0.74 for FY2021.

• We initiate coverage on Cosmo Films limited with a “BUY” and 8 months Target Price of ₹1,481.

PSP Projects Limited

Q3 FY 2022 Review

PSP Projects Limited reported net revenue of ₹48,562.01 lakhs for the quarter ended December 31, 2021, as compared to ₹39,015.86 lakhs for the quarter ended December 31, 2020. EBIT and Profit After Tax were ₹7,568.57 lakhs and ₹5,013.24 lakhs for the quarter ended, December 31, 2021, as compared to ₹6,215.62 lakhs and ₹2,870 lakhs during the corresponding quarter of the previous year.

PSP Projects Limited - Investment Summary

PSP Projects Limited - Overview

• PSP Projects Limited is the second-fastest-growing construction company in the small category in India.

• The company provides One-Stop-Shop solution services across the construction and post-construction activities, including Mechanical, Engineering, and Plumbing (MEP) work and other interior fit-outs to private and public sector enterprises.

• Geographically diversified with presence in six states viz. Gujarat, Rajasthan, Karnataka, Uttar Pradesh, Maharashtra, and New Delhi.

PSP Projects Limited - Recommendation Rationale

• PSP Projects Limited has completed 179 projects to date, establishing a strong relationship with reputed clientele, and has demonstrated a track record of timely completion of projects which has helped it to secure repeat orders from its existing customers consisting of large pharmaceutical, dairy, and public sector entities.

• The company has an order of ₹4,008 crores as of 31st December 2021.

• Recently, the company has emerged as the lowest bidder for the project “Construction of Sports Complex” at Ahmedabad, Gujarat with a bid value of ₹563.99 crores (including GST).

• In the first nine months of FY 2022, the company’s revenue increased by 61% to ₹1,19,341.67 lakhs, as compared to the previous year at ₹74,013.60 lakhs. Profit after Tax increased by 184% to ₹11,143.34 lakhs, as compared to the previous year at ₹3,921.05 lakhs.

• Revenue has grown with 32.65% CAGR from FY2017-FY2021.

• The DIIs have increased their stake from 4.95% to 5.72% in Q3FY2021.

• FIIs have increased their stake from 1.27% to 1.71% in Q3FY2021.

• After completion of the Surat Diamond Bourse Project (₹1575 crores), the company will be eligible for bidding up to ₹2,500 crores.

• The company has been assigned a CARE A+ credit rating for both long-term and short-term facilities.

• Company’s ROCE and ROE have been 25% and 16% and Debt to Equity is 0.14 for FY2021.

• We initiate coverage on PSP Projects limited with a “BUY” and a 1-year Target Price of ₹768.

Grindwell Norton Limited

Q3 FY 2022 Review

Grindwell Norton Limited reported net revenue of ₹49,966 lakhs for the quarter ended December 31, 2021, as compared to₹4,572 lakhs for the quarter ended December 31, 2020. EBIT and Profit After Tax were ₹9,409 lakhs and ₹7,015 lakhs for the quarter ended, December 31, 2021, as compared to ₹9,031 lakhs and ₹6,687 lakhs during the corresponding quarter of the previous year.

Grindwell Norton Limited - Investment Summary

Grindwell Norton Limited - Overview

• Grindwell Norton Limited is one of the subsidiaries of Compagnie De Saint Gobain (Saint Gobain), a transnational group with its headquarters in Paris.

• The company has made an investment of ₹15 lakhs in Cleanwin Energy Three LLP towards a Power Purchase Agreement generated through wind energy generation. The company contribution is 27.77% in Cleanwin Energy Three LLP.

• The company’s manufacturing units are located in Mora (near Mumbai), Bengaluru, Tirupati, Nagpur, Bated (Himachal Pradesh), and Halol (near Vadodara).

Grindwell Norton Limited - Recommendation Rationale

• Grindwell Norton Limited is engaged in the business of Manufacturing Abrasives, Ceramics & Plastics, and Providing IT services. Contribution from the Abrasives segment is around 55%, from the Ceramic & Plastics segment is around 33%, and from the IT segment is around 8%. Thus, the company has a balanced product portfolio, which helps them to mitigate the risk.

• The company is virtually debt-free.

• In the first nine months of FY 2022, the company’s revenue increased by 28% to ₹144,965 lakhs, as compared to the previous year at ₹112,539 lakhs. Profit after Tax increased by 32% to ₹20,930 lakhs, as compared to the previous year at ₹15,902 lakhs.

• The FPI/FII have increased their stake from 4.99% to 6.10% in Q3FY2022.

• Grindwell Norton Limited (GNL) is the market leader in the Indian abrasive market with around 26% market shares.

• GNL has witnessed strong & positive free cash flow consistently over more than a decade irrespective of the macro environment.

• Going forward, accelerated growth in performance plastics & ceramics and exports are expected to drive long-term incremental growth.

• With the increasing demand for the company’s products, strong cash flow, double-digit ratio return could act as a trigger for future price performance.

• Company’s ROCE and ROE have been 24% and 19% for the FY 2021.

• We initiate coverage on Grindwell Norton limited with a “BUY” and a 9 months Target Price of ₹2,600.

Garware Technical Fibres Limited

Q3 FY 2022 Review

Garware Technical Fibres Limited reported net revenue of ₹30,813.06 lakhs for the quarter ended December 31, 2021, as compared to ₹27,842.71 lakhs for the quarter ended December 31, 2020. EBIT and Profit After Tax were ₹5,497.17 lakhs and ₹3,806.25 lakhs for the quarter ended, December 31, 2021, as compared to ₹6,427.15 lakhs and ₹4,315.12 lakhs during the corresponding quarter of the previous year.

Garware Technical Fibres Limited - Investment Summary

Garware Technical Fibres Limited - Overview

• Garware Technical Fibres Limited (GTFL) is one of India’s leading players in the technical textiles sector, providing specialized solutions to the cordage and infrastructure industry worldwide.

• Established in 1976, the company today is a multi-divisional, multi-geographical technical textile company.

• The company manufactures and provides a world-class solution in high-performance polymer ropes, fishing nets, sports nets, safety nets, aquaculture cages, coated fabrics, agriculture netting, and geosynthetics.

• GTFL has two manufacturing facilities at Pune and Wai (in Satara district) in Maharashtra.

Garware Technical Fibres Limited - Recommendation Rationale

• GTFL has over four decades of experience in the cordage industry and commands a dominant share in the organized domestic market. Over a period, the company has established a healthy brand for its fishnets, ropes, and twines, among others, catering to multiple business segments including fisheries, aquaculture, shipping, and industrial sectors.

• The share of GTFL’s premium product portfolio has been increasing during the last few years, driven by an increased focus on innovation and a customer-centric approach. The share of value-added products went up to 70-75% from around 50% during the last three to four years.

• Exports constituted 62% of GTFL’s revenue in FY2021. The company is present in more than 75 countries with healthy positioning in developed markets such as North America and Europe, which contribute to the bulk of export revenues.

• Coupled with its established brand name and quality products because of a better understanding of fibre technology and polymer processing, this enables GTFL to command adequate pricing power.

• In the first nine months of FY 2022, the company’s revenue increased by 19% to ₹83,308.77 lakhs, as compared to the previous year at ₹69,914.82 lakhs. Profit after Tax increased by 5% to ₹11,088.98 lakhs, as compared to the previous year at ₹10,517.82 lakhs.

• Company’s ROCE is 25% and ROE is 19.52% and, Debt to Equity is 0.13 for FY2021.

• We initiate coverage on Garware Technical Fibres Limited with a “BUY” and 1-year Target Price of ₹3,841.

Borosil Renewables Limited

Q3 FY 2022 Review

Borosil Renewable Limited reported net revenue of ₹16,851.20 lakhs for the quarter ended December 31, 2021, as compared to ₹14,012 lakhs for the quarter ended December 31, 2020. EBIT and Profit After Tax were ₹6,478.99 lakhs and ₹4,573.04 lakhs for the quarter ended, December 31, 2021, as compared to ₹4,302.72 lakhs and ₹1,057.77 lakhs during the corresponding quarter of the previous year.

Borosil Renewable Limited - Investment Summary

Borosil Renewable Limited - Overview

• Borosil Renewables Limited is engaged in the business of manufacturing extra clear patterned glass and low Iron Solar Glass for application in Photovoltaic panels, Flat plate collectors, and Greenhouses.

• During FY 2020, three transferor companies got amalgamated with the company and the scientific and industrial products and consumer products businesses of the company demerged into Borosil Limited, and post the process the company is carrying on Manufacturing of Solar glass business.

• During FY 2020, the company successfully raised ₹200 crores through QIP, and the money raised through the issue will be utilized for its expansion from 450 tons per day to 950 tons per day. Capacity is being further expanded from 950 tons per day to 1,950 tons per day in phases by FY 2024.

Borosil Renewable Limited - Recommendation Rationale

• Borosil Renewables Limited is engaged in the manufacturing of low-iron solar glass for application in photovoltaic panels. They are the first and the only producer of solar glasses in the country. The company’s thinner fully tempered solar glass (2mm and 2.5mm) offers a niche product for glass modules.

• The company has a strong focus on expanding its domestic and export footprints. It derives 77% of its revenue from India and the remaining by catering exports mainly to the USA, Turkey, and Europe.

• The company has a 40% market share in the Solar Glass segment.

• With the increasing demand for renewable energy, demand for the company will also increase.

• In the first nine months of FY 2022, the company’s revenue increased by 50% to ₹46,516.83 lakhs, as compared to the previous year at ₹30,829.09 lakhs. Profit after Tax increased by 424% to ₹11,946.67 lakhs, as compared to the previous year at ₹2,276.98 lakhs.

• Company’s ROCE is 23% and ROE is 14.59% and, Debt to Equity is 0.10 for FY2021.

• We initiate coverage on Borosil Renewables Limited with a “BUY” and 1.5 years Target Price of ₹931.

ESCORTS LIMITED