Recommendation from Plastic Products Sector

This column gives you scrip chosen by the research team during the fortnight that is fundamentally strong and expected to give good capital appreciation over a time period of 1 year.[EasyDNNnews:PaidContentStart]

Garware Hi-Tech Films Ltd : PREMIUMISATION DRIVING THE NEXT LEG OF GROWTH

HERE IS WHY
✓  Premium Product Portfolio
✓  Strong Capex with Debt-Free Balance Sheet
✓  Multiple Growth Triggers Ahead

The global specialty films market is witnessing strong growth, supported by rising demand for highperformance materials across automotive, Construction, consumer and industrial applications. Within this, premium films such as paint protection films (PPF), sun control films and specialty polyester films are gaining traction due to increasing consumer awareness, higher vehicle ownership, premiumisation trends and demand for energy-efficient solutions. Against this backdrop, we recommend Garware Hi-Tech Films Ltd as our Choice Scrip. Garware Hi-Tech Films is one of India’s leading specialty film manufacturers with a growing presence in premium and value-added products. The company operates across three major segments: Sun Control Films, PPF and Industrial Products. Approximately 50 per cent of revenue is derived from Sun Control Films, around 25 per cent from PPF, while the balance comes from industrial products. On the geographical front, the company derives approximately 45 per cent of its revenue from the USA, 32 per cent from the Rest of the World, while India contributes the remaining 23 per cent. The company has built a strong domestic and international distribution network while steadily expanding its presence in automotive OEMs, institutional customers and retail consumers. Apart from aftermarket automotive demand, Garware is increasingly targeting institutional opportunities across airports, Railways, hospitality and commercial buildings through its advanced film solutions. Its direct-to-consumer initiative, Garware Home Solutions, is also gaining traction in the residential segment.

Garware delivered a strong performance in FY26, reflecting the benefits of premiumisation and operating leverage. For FY26, the company reported revenue of ₹2,120 crore, EBITDA of ₹500 crore and Profit After Tax (PAT) of ₹338 crore. The company’s performance remained particularly strong in Q4FY26, with revenue growing 8.9 per cent YoY to ₹597 crore, while EBITDA increased 29 per cent YoY to ₹157 crore. PAT surged 39 per cent YoY to ₹108 crore. The significantly higher profit growth compared to revenue growth highlights an improving product mix and the benefits of operating leverage.

The company is also entering a new growth phase driven by multiple expansion initiatives. Garware is commissioning a new TPU (Thermoplastic Polyurethane) line, expected to be operational by October 2026, which will strengthen its presence in premium automotive applications, particularly PPF. In addition, a new Sun Control Film line is planned by FY28. The company has already deployed nearly ₹700 crore in capex to strengthen manufacturing capabilities and support premium product expansion. Despite this large investment cycle, Garware continues to maintain a virtually debt-free balance sheet, with debt of only ₹15.7 crore and cash and liquid investments of around ₹774 crore as of FY26. This provides strong financial flexibility while significantly reducing balance sheet risk, which is uncommon among manufacturing-led growth stories.

Return ratios also remain strong, with ROCE at 18 per cent and ROE at 13.4 per cent, supported by efficient capital deployment and improving profitability. From a valuation perspective, the stock is currently trading at a P/E of 33.9x, which is higher than the industry average of 22.7x and above its three-year median P/E of 24.4x. However, the premium valuation appears justified considering the company’s shift towards high-margin products, strong earnings visibility, debt-free balance sheet and multiple growth triggers over the medium term. Considering the above factors, we recommend a BUY.

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