Stock in focus after acquiring 51% stake in Poland Co. to establish manufacturing facility

One of the small-cap stocks specializing in the design, manufacture, and installation of corrosion-resistant equipment and complete chemical process systems. The stock is in focus after Forays into a Stainless Steel Manufacturing Plant in Poland with Rs. 25.3 Crore Investment 

Stock Price Movement: 

With a market capitalization of Rs. 5,445.22 crores, the shares of GMM Pfaudler Limited were trading at Rs. 1,211.20 per equity share, down nearly around 0.68 percent from its previous day’s close price of Rs. 1,219.55. 

What Happened: 

Pfaudler GmbH, a subsidiary of GMM Pfaudler, has acquired a 51% stake in a limited liability company in Poland, aiming to establish a manufacturing and engineering facility for high-quality stainless steel equipment. 

The total investment of PLN 12.2 million (approx. ₹25.3 crore) includes PLN 11 million for share subscription and PLN 1.2 million as a transaction bonus. The acquisition is expected to be completed within three months. 

Management Comment: 

Mr. Thomas Kehl, CEO of International Business, said, “This acquisition reflects our continued focus on delivering cost-effective, high-quality solutions for our customers. Establishing this facility in Poland aligns with our vision of strengthening our market presence in Europe and beyond.” 

Margin Guidance: 

GMM Pfaudler Limited’s management expects EBITDA margins to remain stable, with a guidance range of 13% to 15% for the year. The second half of FY25 is anticipated to be stronger than the first half, driven by a healthier backlog and improved order intake. 

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New Developments: 

GMM Pfaudler Limited anticipates significant orders in the pharmaceutical sector, particularly in Hyderabad for peptide production. The company plans new product launches in filtration and drying, focusing on value-added, sophisticated equipment. 

Additionally, GMM Pfaudler is expanding into the US market for filtration and drying, aiming to generate annual revenue of $4-$5 million. 

Strategic Initiatives:

GMM Pfaudler Limited is focusing on internal cost optimization and EBITDA improvement projects. The company is establishing an engineering center in India to support international operations and developing a strategic plan to enhance diversification, exploring M&A opportunities for continuous growth. 

Recent quarter results and ratios: 

GMM Pfaudler Limited’s revenue has decreased from Rs. 937 crore in Q2 FY24 to Rs. 805 crore in Q2 FY25, which has down by 14.09 percent. The net profit of GMM Pfaudler Limited has also down by 74.63 percent, from Rs. 67 crore in Q2 FY24 to Rs. 17 crore in Q2 FY25. 

GMM Pfaudler Limited’s revenue and net profit have grown at a CAGR of 46.94 percent and 27.82 percent, respectively, over the last five years. 

In terms of return ratios, the company’s ROCE and ROE should be 19.1 percent and 19.6 percent, respectively. The debt-to-equity ratio of the company is to be 0.91x. GMM Pfaudler Limited’s EPS is to be Rs. 22.8. 

Company Overview: 

GMM Pfaudler Limited was established in 1962 as Gujarat Machinery Manufacturers, designs, manufactures, and installs corrosion-resistant equipment and complete chemical process systems. The company is headquartered in Karamsad, Gujarat, India and serves industries like chemicals, pharmaceuticals, food, and energy. 

With 20 manufacturing facilities across four continents and over 2,000 employees, GMM Pfaudler offers a diverse range of products, including mixing systems, filtration & drying equipment, engineered systems, and heavy engineering equipment. 

Written By – Nikhil Naik 

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