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The growing preference for an alternate to China for equipment sourcing by chemicals and pharma players in Europe and the US is fuelling export prospects for heavy and glass-lined equipment maker, GMM Pfaudler Ltd.
The company, with its orderbook full for the next 9-12 months, expects the share of export revenues to increase to 15-17 per cent from the current 10-12 per cent in the next few quarters.
"Our manufacturing sites in Vatva (Ahmedabad) and Karamsad (Anand) will be used for exports. We have secured large orders from Russia, Spain and the US, besides Europe, where we have significant orders. The drivers for growth are pharma and chemicals companies that have adopted a 'China-plus one' strategy in sourcing equipment and that is paying off," Managing Director, GMM Pfaudler, Tarak Patel, told BusinessLine in a telephonic interaction.
The company's acquisition of bankrupt HDO Technologies Ltd's manufacturing facility in Vatva, Ahmedabad has further strengthened its competitiveness in cost-conscious global markets, especially Europe.
"Now we have India-made equipment with Pfaudler quality, so that is encouraging German and European buyers. We are eyeing Eastern and South-East Europe, besides South-East Asia," Patel said, adding that the company was able to meet customer expectations on the delivery and cost aspects.
On the margins side, Patel says the company has achieved the targeted EBITDA margins of 15 per cent ahead of the guidance for 2024.
GMM Pfaudler announced its second quarter financial results on Thursday with standalone net profit at Rs 29 crore, as against Rs 25 crore in the same quarter last year. Standalone revenue from operations was Rs 206 crore for the quarter as against Rs 154 crore in the corresponding quarter last year.
On a consolidated basis, GMM Pfaudler posted net profit of Rs 39 crore as against Rs 27 crore in the same quarter last year, indicating a 44 per cent jump year-on-year. Consolidated revenue from operations stood at Rs 647 crore, as against Rs 186 crore in the same quarter last year..
Patel informed that the company had EBITDA to debt levels of less than one per cent. Also, company has a comfortable borrowing cost with 5 per cent in India and about 3 per cent internationally. "There is no stress on the borrowing side. And looking at our orderbook, there is no issue of generating cash for us. So, we hope to be debt-free in the next three years or so," said Patel.
GMM Pfaudler shares ended at Rs 4,661.15, up 0.63 per cent on the BSE on Friday. The stocks had hit a 52-week high of Rs 5,435 in May 2021 and a 52-week low of Rs 3,316 on November 9, 2020.
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