Shares of GMM Pfaudler on Tuesday snapped a three-day losing streak, in an otherwise weak trading day for the market. Axis Capital said it has maintain its buy rating on the stock, with a target price of Rs 2,644, based on 36 times September 2024 earnings. This is line with the company’s average PE multiple over the last 5 years, the domestic brokerage said.
The stock rose 2 per cent to hit a high of Rs 1, 671.30 on BSE. The scrip had fallen 16 per cent in the previous three sessions after Pfaudler Inc controlled by DBAG Fund VI sold 78 lakh shares or 17.32 per cent of the company through bulk deals at Rs 1,700 per share. DBAG has been a financial investor in the company since 2014, Axis Capital noted.
It said DBAG Fund VI owned 14.56 per cent stake in the company post stake sale and that Patel family has entered an arrangement to purchase 4.5 lakh shares or 1 per cent from DBAG Fund VI at Rs 1,700 per share. This is subject to regulatory approvals, through an inter–se promoter transfer.
Axis Capital said GMM Pfaudler is a play on the manufacturing shift of chemicals/ pharmaceuticals from China and developed markets to India – a strong theme for the next decade.
“Interestingly, a similar theme is playing out in the company’s own operations. In the international companies that GMM Pfaudler acquires, product manufacturing is moved to India, finishing/assembly is done in developed markets, and a top-quality product is delivered to clients at a developed market pricing,” Axis noted.
Axis Securities expects the company to grow EPS at a CAGR of 61 per cent over FY22-25E.
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