Mehabe score: 6 G Factor: 2 Piotski Score: 5 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 2 and Piotski score of 5.
Description
Rama Steel Tubes is engaged in the business of manufacturing of Steel Pipes and related products.Site:RAMASTEEL
Market Cap:
Rs 158 cr
Price:
94.0
Trading pe:
30.7x
Book-value:
53.7/share
Div yield:
0.00 %
Earning yield:
7.16%
Face-value:
5.00/share
52week high:
100.00
52week low:
25.30
Technical Analysis
Stock trades at 94.0, above its 50dma 78.12. It also trades above its 200dma 65.07. The stock remains bullish on techicals
The 52 week high is at 100.00 and the 52week low is at 25.30
Price Chart
P/E Chart
Sales and Margin
Strengths
– is expected to give good quarter
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
– has a low return on equity of 9.61% for last 3 years.
-Earnings include an other income of Rs.5.45 Cr.
-Debtor days have increased from 52.76 to 74.64 days.
Competition
– The industry trades at a mean P/E of 16.6x. Apollo Tricoat trades at the industry’s max P/E of 44.29x. RAMASTEEL trades at a P/E of 30.7x
– Industry’s mean G-Factor is 4.4 while the mean Piotski score is 8.0. RAMASTEEL has a G-Factor of 2 and Piotski scoreof 5.
– Average 1 month return for industry is 18.3%. The max 1- month return was given by Godawari Power: a return of 48.46 %
Quarterly Results
Sales for period ended Dec 2020 is Rs 153.93 cr compared to Rs 87.14 cr for period ended Dec 2019, a rise of 76.6%
Operating Profits reported at Rs 5.73 cr for period ended Dec 2020 vis-vis 2.15 for period ended Dec 2019 .
Operating Margins expanded 125.5 bps for period ended Dec 2020 vis-vis Dec 2019 .
The EPS for Dec 2020 was Rs 1.79 compared to Rs 2.05 for previous quarter ended Sep 2020 and Rs 0.24 for Dec 2019
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 416.0 cr for period ended TTM vis-vis sales of Rs 353.0 cr for the period ended Mar 2020, a healthy growth of 15.1%. The 3 year sales cagr stood at 3.3%.
Operating margins expanded to 3.0% for period ended TTM vis-vis 2.0% for period ended Mar 2020, expansion of 100.0 bps.
Net Profit reported at Rs 5.0 cr for period ended TTM vis-vis sales of Rs 1.0 cr for the period ended Mar 2020, rising 80.0%.
Company reported a poor Net Profit CAGR of -27.3% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 30.0 cr for period ended Mar 2020 vis-vis Rs -17.0 cr for period ended Mar 2019
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 1.0% compared to 10.0% over the last 3 Years. – The stock has given a return of 189% on a 1 Year basis vis-vis a return of -17% over the last 3 Years. – The compounded sales growth on a TTM bassis is 3% vis-vis a compounded sales growth of 11% over the last 3 Years. – The compounded profit growth on a TTM basis is 71% vis-vis a compounded profit growth of -50% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 0.0% vis-vis 0.0% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 37.67% vis-vis 37.67% for Dec 2020
Conclusion
– is expected to give good quarter – Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
– has a low return on equity of 9.61% for last 3 years.
-Earnings include an other income of Rs.5.45 Cr.
-Debtor days have increased from 52.76 to 74.64 days.
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 78.12 and is trading at 94.0 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
