- 08 Aug 2022
- ICICIdirect Research
ELEVATED INPUT COSTS AND DELAYED SHIPMENTS SUBDUE GTFL’S PROFITABILITY
GARFIBRES - 4464 Change: 203.10 (4.77 %)News: Garware Technical Fibres (GTFL) reported revenue growth of 25% YoY to Rs 304 crore. However lower gross margins (down 660 bps to 67.8%) impacted the profitability. Positive operating leverage led to lower employee cost to sales ratio (declined by153 bps YoY) and lower other expenses to sales ratio (declined by 74 bps YoY) which restricted the decline in EBITDA margin to 440 bps YoY to 13.3%. Absolute EBITDA declined by 5% YoY to Rs41 crore. Higher depreciation and Interest expense alongwith lower other income on YoY basis led to net profit declining by 12% YoY to Rs 28.2 crore.
View: Q1FY23 profitability was negatively impacted due to higher input costs and delayed shipments. The company has passed on the input cost inflation to the customers with a lag. Further lack of availability of containers to deliver high margin products has temporarily impacted the margins for Q1FY23. The delayed shipments will spill over and add to to Q2FY23 sales. The company has witnessed good movement of export orders in Q2FY23 which augurs well for the revenues in Q2FY23. The key monitorable will be the recovery in margins in the ensuing quarter which could get some respite due to gradual softening of raw material cost from its peak levels.
Impact: Negative.