Shares of a monopoly stock in Ashish Kacholia’s portfolio have delivered multibagger returns of 131 percent in the past six months, as its share price increased from ₹ 608.35 to ₹ 1,403.80 apiece. Therefore, if an investor had invested ₹ 1 lakh in the company’s shares six months ago, the value of their holdings would have been ₹ 2.31 lakhs today!
Garware Hi-Tech Films (GHTF) is engaged in the business of manufacturing polyester Films. It is the Market leader and India’s only manufacturer of Sun Control window films for building, safety and auto applications. Moreover, it is a market leader with more than 90 percent market share in shrink film manufacturing in India, as per its website.
Solar control films have properties that help control the sun’s heat, harsh brightness, and harmful UV rays. This product contributes 40 percent towards the total revenue of the company, with 90 percent of its sales coming from the overseas market. IT has patented its SCF production technology in 15 countries, including the U.S. In the domestic market as well.
Domestic brokerage firm Sharekhan recently initiated coverage on the stock. GHTF is the market leader with a strong brand recall, as per the brokerage.
The company has incurred a capital expenditure of ₹ 270 crores in the past two years. This has enabled it to introduce its new product premium paint protection film (PPF), enhance the capacity of existing products (SCF), build a stronger dealer network, and vertically integrate its operations, thereby providing strong medium-term growth visibility.
Sharekhan believes that new domestic automotive rules now allow the usage of safety glazing materials in automobiles, which will increase the domestic demand for SCF. Notably, the is the sole manufacturer of safety glazing films, which conform to new standards. The introduction of new automotive regulations will create new opportunities for GHTF in previously unexplored markets, it added.
Currently, the company operates at 50 percent utilisation, with 80 percent of its products sold in overseas markets. The company is looking to target the SUV and luxury car market in India, which accounts for around 40 percent of the total cars sold in India.
GHTF has set up the Garware Application Studio, where it’s currently training 50 applicators each month. Many buyers of top-end cars want to put PPF in their cars but are unable to find applicators to install the film. The company’s initiative is expected to stimulate demand for PPF products, as highlighted by the brokerage.
Ace investor Ashish Kacholia holds 9,68,322 shares or a 4.17 percent stake in the company. His holdings are worth ₹ 135.93 crores as per the company’s share price on Friday.
With a market capitalization of ₹ 3,219 crores, GHTF is a small-cap company. It has a low return on equity of 11.77 percent and an ideal debt-to-equity ratio of 0.08. Its shares were
trading at a price-to-earnings ratio (P/E) of 19.47, which is lower than the industry P/E of 20.63, indicating that the stock might be undervalued as compared to its peers.
Written by Simran Bafna
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