GMM Pfaudler dips 14% on profit booking post March quarter results

The stock had rallied 95 per cent in the past two months

Shares of GMM Pfaudler dipped 14 per cent to Rs 3,335 on the BSE on Tuesday after the company reported 13 per cent year on year (YoY) decline in consolidated net profit at Rs 11.6 crore for the quarter ended March 2020 (Q4FY20), due to lower revenue. The company -- a leading supplier of process equipment to the pharmaceutical and chemical industry segment -- had profit of Rs 13.3 crore in the year-ago quarter.

In the past two months, the stock has rallied 95 per cent, as compared to 18 per cent rise in the S&P BSE Sensex till Friday. It hit an all-time high of Rs 4,090, hit on April 23, 2020.

The company’s consolidated operating revenue declined 5 per cent YoY to Rs 131.8 crore against Rs 139.1 crore recorded during the corresponding quarter of previous fiscal. Earnings before interest, tax, depreciation and amortization (EBITDA) margin, however, improved to 17 per cent from 14 per cent in Q4 of last year.

The management said the company has been relatively insulated from the current disruption as its order backlog continues to remain strong. They expect to recover the loss of production in the coming quarters. They also see increased activity in the pharma and chemical sectors, resulting in an increased demand for the company’s product and services.

Even though the company lost 20 days of production in April 2020, which in turn will affect Q1FY2021 revenues and profitability, the management is confident that we can recoup the shortfall in coming quarters.

Meanwhile, the board has given an in-principle approval for the setting up a Greenfield manufacturing facility for Glass Lined Equipment in Hyderabad, Telangana subject to the receipt of the relevant approvals. The estimated investments for the setting up manufacturing facility required approximately Rs 50 crore, which the company will use from the cash reserves, it said.

At 10:56 am, the stock was trading 7 per cent lower at Rs 3,628 on the BSE, as compared to 0.69 per cent rise in the S&P BSE Sensex. A combined around 136,000 shares have changed hands on the counter on the NSE and BSE so far.