Garware Wall Ropes (GWRL) has reported lower-than-expected results for Q4FY08 owing to sluggish growth in the cordage segment. Net sales increased 19% y-o-y to Rs1.2 billion, 8% short of our estimate as the revenue share of the cordage business declined to 64% against the full-year average of 73%.
Export sales have also been comparatively lower, comprising 33.4% of revenue in Q4FY08 as compared to 42% in FY07 and 36% in FY06. The EBITDA margin, at 13.2%, was 100bps lower than our estimate due to rising crude prices, which led to higher input costs for cordage products.
We expect the company to record a 23% CAGR in topline during FY08-FY10 on the back of higher execution in the geo-synthetics business. We maintain a BUY call on the stock with a target of Rs210. At CMP of Rs94 the company would discount its FY09E EPS of Rs13.9 by 6.8x which is reasonable vis-à-vis peers.