Garware consolidated Q1FY24 revenue up by 2.7%

In Q1FY24, the company’s consolidated revenue went up 2.7% to Rs 380-crore and PAT was stable at Rs 44-crore compared to Q1FY23. 

During the period, solar protection and speciality films saw a recovery in volumes compared to Q4FY23.

Meanwhile, the paint protection films (PPF) business grew significantly as a result of the expansion of the distribution network and the focus on the premium car segment. The PPF business is expected to maximise capacity utilisation in the coming quarters.

Dr SB Garware, chairperson and managing director of GHFL, said “GHFL has embarked on a major transformation journey with speciality films, expanded distribution channels and a customer-centric approach at its core. Building on the initiatives undertaken a few years ago, the company has effectively positioned itself as a leading manufacturer and exporter of solar control films, paint protection films, and other specialised polyester films. In addition, the commitment to financial improvement is reflected in a strong balance sheet with a healthy cash reserve and a remarkable achievement of zero net debt.”

Monika Garware, vice-chairman and joint managing director, GHFL, added, “Improving our product mix towards value-added films remains a top priority, supported by expected macroeconomic improvements in key markets such as the US and Europe. While the poly-film industry faces challenges from overcapacity and oversupply, GHFL’s outstanding performance is attributed to its commitment to value-added products and its ability to navigate through global macroeconomic adversity. These high-value-added speciality films account for a significant 80% of the company's total revenues, playing a key role in maintaining revenue stability and driving profitability.”

The solar control film (SCF) market in India is highly underpenetrated. The domestic market has shown a higher-than-expected uptake of SCF, prompting the decision to re-introduce the company’s safety glazing window film in India. The safety glazing window film has high UV and heat rejection properties, improves fuel efficiency and protects passengers from shattered glass. 

“On the export side, the improved macroeconomic situation in the US has contributed to a recovery in volumes and the company’s business outlook, although challenges remain in the European and UK markets. However, our strategic response has been to increase deployment resources in international markets to actively engage and win new customers,” Garware said.

GHFL is experiencing a robust demand for paint protection film (PPF) in India and in the export market, enabling maximise capacity utilisation in the coming quarters. The key driver is to educate and create awareness among end-customers to increase sales by focusing on the premium automotive sector and higher film content from the electric vehicle (EV) segment. 

“To ensure superior and consistent application of the product for end users, we have also initiated an ongoing training programme for the PPF applicators. As the only manufacturer of premium PPF in the country, around 80% of GHFL’s products are exported to key global markets. Leveraging SCF’s distribution network and asset-light application studios (GAS), GHFL is poised for strategic business expansion,” he added.

Garware said a dedicated shrink film production line is complemented by additional fungible capacity to increase output. During Q1FY24, Pearl Float and Solid White shrink films were commercialised. The shrink film business has seen significant expansion due to focused efforts in the domestic market, boosted by a shift in customer preference from PVC-based films to recyclable PET-based shrink films. GHFL currently has a 60% market share with prominent converters within India. With control over the fully integrated production cycle, GHFL is poised to unlock significant potential by providing tailor-made, high quality and environmentally friendly shrink films in line with market requirements.

In Q1FY24, GHFL reported consolidated revenues of Rs 380-crore, a growth of 2.7% over Q1FY23. This growth was driven by a manifold increase in the volume of PPF business in both export and domestic markets, though tempered by subdued demand in SCF. The company’s presence in speciality films has positioned it for superior growth compared to the poly film industry, which is currently facing overcapacity.

In the first quarter of FY24, EBITDA was at Rs 73-crore, an increase of 2.9% over the corresponding quarter last year. This improvement in EBITDA was driven by higher PPF volumes and lower other expenses. However, these gains were tempered by lower-than-expected SCF volume growth in some key markets due to geopolitical tensions and destocking, coupled with margin pressure on IPD products, which could not be fully passed on to domestic customers due to overcapacity constraints.

Expected growth in solar control films will be driven by domestic demand and favourable prospects in the automotive and architecture sectors. The re-launch of the company's safety glazing window films for the domestic market is adding further momentum. 

In the PPF business, the company is optimistic about both the Indian and global markets due to increasing customer awareness of PPF attributes such as scratch resistance, hydrophobicity and self-healing properties. In addition, the company expects higher PPF penetration driven by the premiumisation of the Indian automotive market and the rapid growth of the EV segment.