Mehabe score: 5 G Factor: 5 Piotski Score: 4 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 5 and Piotski score of 4.
Description
Deccan Cements is engaged in the business of Manufacturing of Cement.
The company commenced operations in 1979. The manufacturing plant in Bhavanipuram (Nalgonda, Telangana) has installed capacity of 2.25 million ton per annum. DCL operates in Telangana, Andhra Pradesh, Tamil Nadu, Kerala, and Karnataka. Mr M B Raju is the promoter, while Ms P Parvathi manages the business.Site:DECCANCE
Market Cap:
Rs 798 cr
Price:
570.0
Trading pe:
8.05x
Book-value:
364/share
Div yield:
0.70 %
Earning yield:
19.94%
Face-value:
5.00/share
52week high:
588.20
52week low:
221.00
Technical Analysis
Stock trades at 570.0, above its 50dma 467.9. It also trades above its 200dma 390.82. The stock remains bullish on techicals
The 52 week high is at 588.20 and the 52week low is at 221.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
– is expected to give good quarter
Weakness
– The company has delivered a poor sales growth of 6.42% over past five years.
– has a low return on equity of 12.80% for last 3 years.
-Dividend payout has been low at 10.73% of profits over last 3 years
Competition
– The industry trades at a mean P/E of 18.4x. The Ramco Cement trades at the industry’s max P/E of 30.07x. DECCANCE trades at a P/E of 8.05x
– Industry’s mean G-Factor is 5.1 while the mean Piotski score is 8.0. DECCANCE has a G-Factor of 5 and Piotski scoreof 4.
– Average 1 month return for industry is 11.7%. The max 1- month return was given by Deccan Cements: a return of 26.96 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 214.0 cr compared to Rs 124.0 cr for period ended Mar 2020, a rise of 72.6%
Operating Profits reported at Rs 37.0 cr for period ended Mar 2021 vis-vis 11.0 for period ended Mar 2020 .
Operating Margins expanded 841.9 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 15.76 compared to Rs 23.62 for previous quarter ended Dec 2020 and Rs -2.11 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 758.0 cr for period ended Mar 2021 vis-vis sales of Rs 556.0 cr for the period ended Mar 2020, a healthy growth of 26.6%.
Operating margins expanded to 23.0% for period ended Mar 2021 vis-vis 14.0% for period ended Mar 2020, expansion of 900.0 bps.
Net Profit reported at Rs 115.0 cr for period ended Mar 2021 vis-vis sales of Rs 57.0 cr for the period ended Mar 2020, rising 50.4%.
Company recorded a healthy Net Profit CAGR of 43.4% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 15.0% compared to 13.0% over the last 3 Years. – The stock has given a return of 143% on a 1 Year basis vis-vis a return of 11% over the last 3 Years. – The compounded sales growth on a TTM bassis is 14% vis-vis a compounded sales growth of 4% over the last 3 Years. – The compounded profit growth on a TTM basis is 36% vis-vis a compounded profit growth of 11% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 2.89% vis-vis 2.62% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 38.65% vis-vis 38.39% for Dec 2020
Conclusion
– is almost debt free.
– is expected to give good quarter – The company has delivered a poor sales growth of 6.42% over past five years.
– has a low return on equity of 12.80% for last 3 years.
-Dividend payout has been low at 10.73% of profits over last 3 years
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 467.9 and is trading at 570.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
