Buy Grindwell Norton @ Rs 726 // Pradnya Gaikwad // 3 Feb 2016
pradnya gaikwad
The Abrasives industry currently has two major players offering a full range of Abrasives products, one of which is GNO. GNO has a leadership position in several product-market segments. Apart from the two major players in the market, there are a few medium-sized players and a number of small local players. Besides, imports from China are present in many categories, particularly, at the low end.
Some of the players from Europe and Japan have their agents and/or distributors to service mainly the precision grinding market. In the case of Coated Abrasives, a few important international players have set up conversion facilities and are in the process of setting up manufacturing facilities.
Also most of the Power Tool players are now focusing on developing their accessories business which includes Thin Wheels and some Coated Abrasives. The market, over a period of time, has become price sensitive. Key success factors are quality, cost, service and capability to provide total grinding solutions.
Saint-Gobain is a major player worldwide in Abrasives. It has a strong product portfolio, a strong R&D set-up with projects in both basic and applied areas and global reach, with plants and marketing/sales organizations all over the world. GNO benefits from being a part of such an organization, in terms of access to all developments in products and process technology, sourcing of products and development of exports.
Abrasives sales registered significant growth over the previous year, primarily on account of new products, penetration of new markets and gains in market share. Product prices were also increased, but the increase was below expectations and the business is yet to recover the significant cost increases of the previous two years. As a result, while the business margin expanded in the current fiscal (thanks to higher volumes, higher price levels and stable input costs), it was still lower than in 2011-12.
STOCK INFO | ||
Sector Grinding Wheels Market Cap Rs4,052.35 52WeekH/L (BSE) 610.00 / 829.50 52WeekH/Low (NSE) 610.00 / 829.50 Volume 391 Face value 5.00 BSE Sensex 734.25 NSE 727.95 |
Category % of Holding |
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| (A)Promoters 7.70 (B) General Public 19.91 (C) Others 9.44 (D) NBFC And Mutual Funds 11.50 (E) Financial Institutions 3.97
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Total 100.00 |
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The year under review was better compared to the previous year, but it was not without its difficulties and challenges. Industrial output registered some growth, but this was on a low base and much below expectations. Investment demand was non-existent and project activity remained at a very low level. Under these circumstances, the business delivered a strong performance with improvements in several areas.
Abrasives sales registered significant growth over the previous year, primarily on account of new products, penetration of new markets and gains in market share. Product prices were also increased, but the increase was below expectations and the business is yet to recover the significant cost increases of the previous two years. As a result, while the business margin expanded in the current fiscal (thanks to higher volumes, higher price levels and stable input costs), it was still lower than in 2011-12.
Market Price: Rs726
Target Price: Rs 871.2