Garware Wall Ropes Ltd (GWRL) is engaged in the manufacturing of ropes, twines and cordage, nettings, multi-filament yarns, and geotechnical nets and fabrics of nets and net-related products. It provides innovative and application focused solutions to diversified applications across fishing, aquaculture, agriculture, sports, and other segments. The fisheries segment is the biggest contributor to overall revenue (~25%), followed by ropes (~23-25%) and aquaculture (~20%). Sports nets, geosynthetics, defence and agri nets, albeit small, are the relatively fast-growing segments led by rising penetration both in export and domestic markets.
Demand revival coupled with the Company’s efforts towards portfolio premiumisation, constant product innovation and strengthening presence in fast growing segments like agriculture, geo-synthetics and defence have boosted growth. Increased emphasis on infrastructure and defence expenditure by the government, coupled with a good monsoon season in most areas of India, is expected to augur well for the Company’s domestic business across segments.
Demand for GWRL’s aquaculture solutions (fish farming cages) and X2 ropes (used in water transport, fishing, shipping, oil exploration) has been robust internationally. Chile and Norway are the new aquaculture markets under consideration (GWRL is well established in Canada and Scotland already). The exports business will continue to perform well.
In India, the use of technical textiles has been gaining momentum. GWR aims to capitalize on this trend to capture a higher market share (particularly in fields with a low competitive intensity such as geosynthetics, agriculture, and defence). With the rationalization of GST rates on fishnets and some agriculture products, the domestic business is expected to revive. In the defence space, GWR has expanded its product range from camouflage nets to inflatable tents, surveillance balloons, PVC-coated water storage tanks, and aerostats. In the agriculture segment, the company’s product line-up now includes insect protection nets, shade nets, and hail protection nets.
GWRL aims to win defence contracts by forging partnerships and developing new products to complement its traditional offerings of industrial ropes, textiles and nets used in fishing and sports. The company has started making fabric covers that protect radar equipment from weather conditions; it signed a pact with Israel’s Aero-T to manufacture surveillance balloons called aerostats. Other notable innovation in this segment includes inflatable tents such as the new Hi5 (“Home-in-5 minutes”) tents. Compared to conventional metal frame tents, GWRL’s Hi5 tents have lower weight, are easily transportable, are highly durable and can be inflated in just 5 minutes.
GWRL looks attractive currently given its strong technical textiles capabilities. Improved product mix and cost efficiencies should result in steady gains in margins. Improving cash flows, low leverage, consistent dividend payouts and consistent returns on equity as well as capital employed provide valuation comfort.
Sabyasachi Paul has been associated with equity research and advisory on equity markets in India for over 9 years & currently heads the equity research desk of Eastern Financiers Ltd, Kolkata. He also manages a portfolio on the online platform Kristal. Find link to the strategy named ‘The Tortoise’