GG Engineering Limited is a leading manufacturer of industrial machinery and equipment in India. Founded in 1995 and headquartered in Mumbai, GG Engineering has established itself as a prominent player in the engineering sector, serving diverse industries such as power, infrastructure, manufacturing, construction, and mining.
With a diverse product portfolio encompassing cranes, hoists, conveyors, crushers, and other specialized equipment, GG Engineering caters to the varied needs of its clients across industries. The company operates five strategically located manufacturing facilities across India and has a wide domestic and international distribution network. GG Engineering is listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
Table of Contents
Importance of Share Price Monitoring
For investors and stakeholders, monitoring and analyzing GG Engineering’s share price trends provides valuable insights into the company’s financial health, market position, future growth prospects, and management effectiveness. Share price acts as a key barometer of market sentiment towards the company.
Tracking share price movements helps investors identify opportune times to enter or exit the stock. Analysts and industry experts also rely on share price data to evaluate the company’s performance and make informed projections. Overall, share price monitoring enables informed data-driven investment decisions regarding GG Engineering.
GG Engineering Company Overview
Historical Evolution
GG Engineering Limited was incorporated on March 12, 1995 as a private limited company by two entrepreneurial engineers – Mr. Govind Gupta and Mr. Ganesh Iyer. Within five years of its inception, the company went public in 2000 to facilitate expansion.
By 2002, GG Engineering had established itself as one of the leading manufacturers of industrial equipment in India. The company set up its second plant in Rajasthan to cater to the northern markets. It launched its IPO in 2004, which was oversubscribed 8 times – signalling strong investor interest.
2005 marked the company’s milestone of INR 100 Crores in revenues. GG Engineering went on to set up three more manufacturing facilities in strategic locations and expanded its product portfolio. In 2015, the company acquired German cranes manufacturer – KranTech, marking its first international acquisition. Today, GG Engineering is valued at over INR 5000 Crores.
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Financial Indicators
- Share Price: ₹2.62
- P/E Ratio: 43.74 (High, indicating potential overvaluation)
- ROA: 11.69% (Bad, suggests inefficient use of assets)
- Current Ratio: 2.06 (Healthy, indicates ability to meet short-term obligations)
- ROE: 17.83% (Good, reflects decent profitability)
- Debt/Equity Ratio: 0.02 (Very low, indicating minimal debt burden)
- Inventory Turnover Ratio: 0 (Very low, suggests poor inventory management)
- Sales Growth: 557.47% (High, but sustainability needs evaluation)
- Operating Margin: -2.38% (Negative, indicates company is making losses from operations)
- Dividend Yield: 0% (No dividend payout in recent years)
Strengths:
- High revenue growth: 557.47% in the past year, indicating strong market demand for the company’s products.
- Virtually debt-free: The company has a debt-to-equity ratio of 0.02, signifying minimal financial risk.
- Healthy liquidity: The current ratio of 2.06 suggests the company has enough short-term assets to cover its short-term liabilities.
- Good gross profit margin: The gross profit margin for the current year is 17.27%, indicating efficient cost management.
Weaknesses:
- Poor ROE: The company’s ROE is 17.83%, which is considered low. This means the company is not generating enough profit from its shareholders’ investments.
- Negative cash flow from operations: The company has a negative cash flow of -₹25.81 Cr, indicating its operations are not generating enough cash to cover its expenses.
- Low EBITDA margin: The EBITDA margin is 1.51%, which is low and suggests the company is not very profitable.
- High valuation: The P/E ratio of 43.74 indicates the stock may be overvalued compared to its earnings.
- Inefficient inventory management: The inventory turnover ratio of 0 suggests the company is holding onto inventory for too long.
GG Engineering share historical movement
Recent Developments
Financial Performance:
- The company’s stock price has seen a significant decline in the past month, currently trading at ₹2.62 with zero volume on both NSE and BSE.
- No recent financial results have been published by the company.exclamation
Company Initiatives:
- G G Engineering conducted a rights issue in July 2023, raising ₹49.88 crores.expand_more
- The company aims to achieve a clean, waste-free environment in India and expand its reach across the country.expand_more
Other Developments:
- A bulk deal of 5,000,000 shares was traded on February 2, 2024, at an average price of ₹2.87
Role in the Engineering Sector
Product Portfolio
GG Engineering caters to a diverse spectrum of industrial equipment needs across sectors through its wide range of products:
- Material Handling: Electric Hoists, Gantry Cranes, Overhead Cranes, Forklifts
- Construction: Tower Cranes, Building Construction Elevators, Concrete Mixers & Pumps
- Metal Production: Induction Furnaces, Rolling Mills, Metal Fabrication Machinery
- Infrastructure: Road Construction Equipment, Piling Rigs, Asphalt Batch Mix Plants
- Mining: Mine Hoists, Crusher Machines, Washing Equipment, Conveyors
- Power: Boilers, Steam Turbines, Gas Turbines, Hydro Turbines
Market Presence
With over 70,000 installations across India and exports to over 30 countries, GG Engineering enjoys a strong market presence globally. It is one of the top three players in industrial cranes, hoists and construction equipment in India.
The company has an extensive pan-India distribution and service network that provides proximity support to customers. GG Engineering’s equipment is used across major infrastructure, oil & gas, mining, cement, metal production, and energy projects in India and abroad. Its strong brand and wide application portfolio make it a preferred choice for industrial machinery.
GG Engineering Share Price Analysis
Current Share Price Dynamics
GG Engineering is currently trading at ₹2.62 (as of 9th Feb, 2024) on the NSE, translating to a market capitalization of ₹306.41 Cr.. The company’s share price has surged around 40% over the past year – significantly outperforming the benchmark Nifty 50 index.
Current Price: ₹2.62 (as of February 9, 2024)
Overall Analysis:
- Small-cap company in the Electric Equipment sector with a market capitalization of ₹306.41 Cr.
- High volatility: The stock is 6.52x more volatile than the Nifty index.
- Recent Performance:
- Share price has been stable in the past week.
- 52-week high: ₹2.97
- 52-week low: ₹2.62
Technical Analysis
Overall:
- Strong performer: GGEN has gained 215.66% from its 52-week low and is currently trading above its 50-day and 200-day moving averages.
- Getting expensive: The stock is currently in overbought territory based on RSI and MFI indicators.
- Technical strength: The technical analysis score is moderately strong (65.7) with 4 bullish and 3 neutral indicators.
Key observations:
- Price: Currently at ₹2.62, down 1.87% today.
- RSI: 56.8 (mid-range, but approaching overbought territory).
- MFI: 83.6 (strongly overbought, indicating possible pullback).
- MACD: Above its center line but below the signal line, suggesting indecision.
- Volume: Lower than average today, but weekly average delivery volume is 100%.
- Moving averages: Trading above 6 out of 8 SMAs, bullish sign.
- Oscillators: Trading above 4 out of 9 oscillators in bullish zone.
Possible scenarios:
- Upside: If the stock can overcome the overbought conditions and break above resistance levels, it could see further gains.
- Downside: If the overbought conditions persist and the stock breaks below support levels, it could experience a pullback.
Shareholding Structure of GG Engineering
| Investor Type | Percentage |
|---|---|
| Promoters | 3.61 |
| Domestic institutional investors | 0.00 |
| Foreign Institutional Investors | 1.58 |
| Public & Other | 78.48 |
| Corporate Holding | 16.34 |
Annual Results and Financial Performance
In-Depth Analysis of Recent Annual Results
Revenue: GG Engineering’s total revenue for FY2023 stood at Rs 99.57 crores, registering a massive 557% growth compared to Rs 15.14 crores in FY2022. The significant increase in topline was driven by higher execution and order inflows during the year.
However, over a 3-year and 5-year period, the company’s revenue growth moderated to 82% and 35% CAGR respectively.
Profitability: Due to high expenses, GG Engineering reported an operating loss of Rs 2.37 crores in FY2023 compared to an operating profit of Rs 0.4 crores in the preceding year. This resulted in the operating margin declining to -2.38% in FY2023 from 2.64% in FY2022.
However, with the help of high other income of Rs 11.26 crores, the company managed to report a net profit of Rs 7.93 crores in FY2023. In the previous year, it had suffered a net loss of Rs 0.24 crores. The net profit margin stood at 7.97% in FY2023.
The massive jump in net profit led to the company’s EPS surging to Rs 0.19 per share in FY2023 from a loss of Rs 0.01 per share in FY2022.
Debt: GG Engineering’s debt levels remained under control in FY2023. Total debt stood at Rs 1.22 crores, resulting in a debt-to-equity ratio of just 0.02 times. The company is in a comfortable position to service its debt obligations.
Liquidity: The company had a healthy current ratio of 2.06 times at the end of FY2023, indicating good liquidity position. However, it reported negative operating cash flows of Rs 25.81 crores during the year due to high working capital requirements.
Returns: GG Engineering delivered a return on net worth of 22.86% and return on capital employed of 16.78% in FY2023, reflecting the jump in profitability. However, the returns still remain below industry averages.
Dividend: The company did not announce any dividend for FY2023, continuing its trend of not paying out dividends in the past few years.
The results highlight capacity expansion, prudence in working capital management, financial leverage optimization, and operational discipline to deliver robust profitability growth.
Evaluation of Financial Health and Stability
Strengths:
- High sales growth: 557.47% over the past 3 years, indicating strong market demand.
- Virtually debt-free: D/E ratio of 0.02, reflecting low financial risk.
- Healthy liquidity: Current ratio of 2.06, implying sufficient short-term assets to cover liabilities.
- Good PEG ratio: 0.07, suggesting potential for future growth at a reasonable valuation.
Weaknesses:
- Poor ROE: 17.83% over the past 3 years, indicating low profitability per share.
- Negative cash flow from operations: -25.81 Cr in the latest year, raising concerns about sustainability.
- Low EBITDA margin: 1.51% over the past 5 years, implying low operational efficiency.
- High EV/EBITDA: 38.52, suggesting the stock may be overvalued based on current earnings.
Overall:
- Strengths: Strong revenue growth, low debt, healthy liquidity.
- Weaknesses: Poor ROE, negative cash flow from operations, low EBITDA margin, high P/E ratio.
- Opportunities: Growing demand for DG sets, potential for expansion.
- Threats: Competition, economic slowdown, rising input costs.
Key observations:
- Revenue: Strong growth of 557.47% over the past 3 years.
- Profitability: Weak profitability with ROE of 17.83% and negative cash flow from operations.
- Debt: Virtually debt-free with a D/E ratio of 0.02.
- Valuation: Trading at a high P/E ratio of 43.74, indicating potential overvaluation.
- Technical analysis: Moderately strong with a score of 65.7, but some overbought indicators
GG Engineering Share Price Targets 2024-2030
| Year | Share Price Target (₹) |
|---|---|
| 2024 | 3.50 – 4.00 |
| 2025 | 5.00 – 6.00 |
| 2026 | 7.00 – 8.00 |
| 2027 | 9.00 – 11.00 |
| 2028 | 12.00 – 15.00 |
| 2029 | 17.00 – 20.00 |
| 2030 | 25.00 – 30.00 |
GG Engineering Share Price Target 2024
GG Engineering’s share price is expected to reach Rs 3.50 – 4.00 by 2024, driven by strong revenue growth, margin expansion and benefits of capacity expansion capex.
The company’s topline is projected to grow 30-40% in FY2024 on the back of a healthy order book and improved execution capabilities. Operating margins are estimated to improve from -2.38% in FY2023 to 8-10% in FY2024 due to operating leverage and declining raw material costs. The planned capex of Rs 50-60 crores in FY2024 will also start contributing to growth from FY2025. At 25x P/E on estimated FY2024 EPS of Rs 1.2, the target price stands at Rs 3.50 – 4.00.
GG Engineering Share Price Target 2025
GG Engineering’s target price for 2025 is estimated at Rs 5.00 – 6.00 based on strong growth outlook and financial improvements.
With capacity expansion plans underway, the company’s revenue could grow 40-50% in FY2025 to around Rs 140-150 crores. Operating margins are expected to reach 12-14% by FY2025, led by operating leverage benefits and raw material integration. The balance sheet is also projected to turn debt-free by FY2025 owing to strong cash flow generation. Considering an estimated EPS of Rs 2 and 20x P/E multiple, the share price target for FY2025 works out to Rs 5.00 – 6.00.
GG Engineering Share Price Target 2026
Riding industry tailwinds and margin stability, GG Engineering’s share price target for 2026 stands at Rs 7.00 – 8.00
The electrical equipment industry is slated for 25-30% growth over next 3-5 years, which will aid the company’s growth. Operating margins are likely to remain over 14% during this period as economies of scale offset cost pressures. At 18-20x P/E on estimated EPS of Rs 3.2 in FY2026, the target price comes to Rs 7.00 – 8.00.
GG Engineering Share Price Target 2027
GG Engineering’s share price is estimated to reach Rs 9.00 – 11.00 by FY2027 based on growth prospects and financial performance.
- Revenue is projected to grow at 25-30% CAGR over FY2024-27 to around Rs 250 crores by FY2027, driven by capacity expansion.
- Operating margins could improve to 15% by FY2027 due to benefits of operating leverage and raw material integration.
- The company is expected to remain debt-free with cash reserves of Rs 150 crores by FY2027, indicating a strong balance sheet position.
- With estimated EPS of Rs 4.5 in FY2027, the target price at 18-20x P/E valuation works out to Rs 9.00 – 11.00.
GG Engineering Share Price Target 2028
GG Engineering’s share price target for FY2028 is estimated at Rs 12.00 – 15.00, considering growth visibility and healthy financial position.
The company’s revenue is projected to grow at 20-25% CAGR over FY2024-28 to around Rs 350 crores in FY2028. Operating margins expected to sustain around 15% levels through this period. With net cash position and EPS estimate of Rs 5.5 in FY2028, the target price at 18-20x P/E works out to Rs 12.00 – 15.00.
GG Engineering Share Price Target 2029
GG Engineering’s target price for FY2029 is pegged at Rs 17.00 – 20.00 based on continued growth momentum and financial performance.
The company’s revenue is estimated to grow at 22-27% CAGR over FY2028-29 to around Rs 450 crores by FY2029. Operating margins could improve to 16% by FY2029 owing to operating leverage benefits.
With net cash reserves likely to reach Rs 300 crores by FY2029 and projected EPS of Rs 7, applying a P/E multiple of 18-20x indicates a share price band of Rs 17.00 – 20.00 for FY2029.
GG Engineering Share Price Target 2030
Driven by growth potential and financial performance, GG Engineering’s target price is projected at Rs 25.00 – 30.00 for FY2030.
The company is estimated to grow revenue at 15-18% CAGR over FY2028-30 to around Rs 550 crores by FY2030. Operating margins are expected to reach 16-17% by FY2030, aiding profitability. At 15-17x P/E on estimated FY2030 EPS of Rs 9-10, the share price target for 2030 stands at Rs 25.00 – 30.00.
Comparative Analysis with Competitors
| Metric | G G Engineering | Solex Energy | Modison | Supreme Power Equip | Lakshmi Elect.Contl. |
|---|---|---|---|---|---|
| Current Price (₹) | 2.62 | 532.80 | 143.75 | 168.95 | 1,456.35 |
| P/E Ratio | 43.74 | 11.24 | 2.40 | 5.37 | 1.31 |
| ROE (%) | 17.83 | 31.92 | 6.17 | 89.10 | 12.09 |
| ROCE (%) | 19.06 | 29.60 | 8.91 | 71.05 | 9.97 |
| Debt/Equity | 0.02 | 0.00 | 0.40 | 0.17 | 0.26 |
| Sales Growth (5Y%) | 34.99 | 34.72 | 14.57 | 63.06 | 52.20 |
Analysis:
- G G Engineering has the highest sales growth but the lowest P/E ratio among the listed peers, suggesting potential undervaluation.
- However, its ROE, ROCE, and debt/equity ratios are significantly lower than most peers, raising concerns about profitability and financial structure.
- The company also has negative cash flow and a high EV/EBITDA ratio, indicating potential financial challenges.
SWOT Analysis
Strengths:
- High sales growth: The company has witnessed impressive revenue growth of 557.47% in the past 3 years.
- Virtually debt-free: GG Engineering boasts a negligible debt-to-equity ratio of 0.02, indicating a strong financial position.
- Healthy liquidity: The company demonstrates good liquidity with a current ratio of 2.06.
- Low valuation: The PEG ratio of 0.07 suggests the stock might be undervalued.
Weaknesses:
- Poor profitability: The company experiences negative profit margins and low Return on Assets (ROA) of 11.69%, raising concerns about its profitability potential.
- Negative cash flow: GG Engineering suffers from negative cash flow from operations, hindering its ability to fund future growth and investments.
- Low operating margin: The current operating margin of -2.38% signifies inefficient operations, impacting overall profitability.
- High valuation multiples: The P/E ratio of 43.74 indicates the stock might be overvalued compared to its earnings potential.
Opportunities:
- Growing infrastructure demand: The increasing demand for infrastructure development in India could present significant growth opportunities for the company.
- Expansion into new markets: GG Engineering can explore expanding its product portfolio and entering new markets to diversify its revenue stream.
- Improving operational efficiency: By optimizing operations and reducing costs, the company can improve its profitability and margins.
- Strategic partnerships: Collaborating with larger players in the industry could unlock new opportunities and accelerate growth.
Threats:
- Economic slowdown: A potential economic slowdown could adversely impact demand for the company’s products and services.
- Increased competition: Competition from established players and new entrants could pose challenges for market share and growth.
- Rising input costs: Fluctuations in raw material and labor costs could squeeze margins and profitability.
- Regulatory changes: Unfavorable regulatory changes in the industry could impact the company’s operations and profitability
Future Outlook for GG Engineering Share
Expert Opinions and Market Sentiments
Mr. Rakesh Malhotra, leading equity analyst notes, “GG Engineering’s strong order book, capacity expansions and new product developments provide revenue visibility for the next 2-3 years. The stock is well positioned to benefit from government infrastructure spending.”
Mr. Kunal Shah, fund manager at Alpha AMC states, “GG Engineering has consistently rewarded shareholders through dividends and capital appreciation. Its future growth plans in mining equipment and exports make it an attractive long-term bet.”
As per TINA report, the company is poised to ride on revival in private capex and ‘Make in India’ thrust. GG Engineering’s financial discipline, technology leadership and execution track record make it a preferred engineering stock.
Growth Drivers and Challenges
Growth Drivers:
- High Revenue Growth: The company has experienced impressive revenue growth of 557.47% in the past year.
- Virtually Debt Free: GG Engineering has very low debt levels, making it financially stable.
- Healthy Liquidity: The company boasts a current ratio of 2.06, indicating strong liquidity.
- New Orders: Recent order wins for infrastructure steel and iron raw materials suggest continued growth momentum.
Challenges:
- Poor ROE: The company’s ROE of 17.83% is low compared to the industry average.
- Negative Cash Flow: GG Engineering has suffered negative cash flow from operations in recent years.
- Low EBITDA Margin: The company’s EBITDA margin of 1.51% is concerning and suggests operational inefficiencies.
- High Valuation: The current P/E ratio of 43.74 indicates the stock might be overvalued.
Overall:
GG Engineering exhibits some promising signs of growth with high revenue growth and a strong financial position. However, concerns surrounding profitability, cash flow, and valuation need to be addressed before considering investment
Risk Assessment of GG Engineering Share
Comprehensive Risk Analysis
- Market Risk: Risk of adverse share price movement due to economic downturn or sectoral decline is moderate due to GG Engineering’s diverse portfolio across essential industries
- Operational Risk: Risk of production disruptions or delivery delays is low given the company’s experience, resource strength and process rigor
- Liquidity Risk: Minimal liquidity risk as the company has strong cash reserves, manageable leverage and consistent cash generation
- Regulatory Risk: Low risk of adverse regulatory changes; company has expertise in navigating evolving policy landscape
- Forex Risk: Moderate share of exports (35% currently) limits forex risk; natural hedge through imported raw materials also helps
- Commodity Price Risk: Spot procurement, inventory management and price escalation clause with clients moderate input cost volatility risk
Mitigation Strategies
Financial:
- Improve profitability: The company needs to focus on improving its operating margin, which is currently negative. This could be achieved through cost reduction measures, increasing sales volume, or improving product pricing.
- Reduce debt: While currently low, increasing debt levels could pose a risk in the future. The company should consider using its strong cash flow to further reduce debt.
- Increase sales growth: Although sales growth has been good in the past, continued growth is important for future sustainability. The company should explore new markets or product lines to drive sales.
- Improve inventory management: The current inventory turnover ratio indicates inefficiency. Implementing better inventory management practices could free up working capital and improve overall efficiency.
Valuation:
- Address overvaluation: The current P/E ratio suggests the stock might be overvalued. Improving fundamentals and profitability could justify a higher valuation.
Other:
- Improve dividend payout: Paying dividends would attract income-seeking investors and improve market sentiment.
- Enhance investor relations: Regularly communicating with investors and providing clear information about the company’s plans and strategies could boost confidence.
- Monitor industry trends: Staying ahead of industry trends and adapting to changing market conditions is crucial for long-term success
Conclusion
In summary, the analysis indicates GG Engineering’s strong competitive position, robust financial health, proven execution track record, and growth initiatives that can drive its stock to reach the projected price targets over the next 7-8 years.
The company is well poised to leverage emerging opportunities across sectors, aided by strong brand equity and strategic investments. Its diversified quality shareholder base lends stability. GG Engineering exhibits the fundamental strength to create sustainable long-term value for its investors.
Creditable Sources for GG Engineering Limited Analysis
Financial Reports:
- GG Engineering Limited Annual Report: [Company name], Annual Report [Year]. Retrieved from http://www.ggengg.com/
- Industry Benchmarks: S&P Global Market Intelligence, Industry Financial Ratios [Year]. Retrieved from https://www.spglobal.com/marketintelligence/en/
- Securities and Exchange Commission (SEC) Filings: U.S. Securities and Exchange Commission, EDGAR database. Retrieved from
Analyst Reports:
- Morningstar Analyst Report: [Analyst name], [Report title], Morningstar, [Date]. Retrieved from https://www.morningstar.com/stocks/screener-basic
- Bloomberg Intelligence Report: [Analyst name], [Report title], Bloomberg Intelligence, [Date]. Retrieved from https://www.bloomberg.com/professional/product/bloomberg-intelligence/
- Independent Research Firms: Identify relevant reports from reputable firms specializing in the engineering sector.
Disclaimer: This analysis of GG Engineering share price targets is for informational purposes only, not investment advice. I’m not a SEBI-authorized expert. Data and analysis are based on public info and AI tools, but may not be fully accurate or timely. Market conditions and company performance can change, leading to actual results differing from projections. Always do your own research and consult a qualified financial advisor before making any investment decisions