Mehabe score: 4 G Factor: 3 Piotski Score: 2 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 3 and Piotski score of 2.
Description
Simplex Castings is mainly engaged in Manufacturing of SG Iron, Steel, Special Alloy Castings, C.I. Castings and Equipments.Site:513472
Market Cap:
Rs 12.0 cr
Price:
19.5
Trading pe:
x
Book-value:
71.8/share
Div yield:
0.00 %
Earning yield:
-28.10%
Face-value:
10.0/share
52week high:
25.00
52week low:
13.50
Technical Analysis
Stock trades at 19.5, above its 50dma 17.98. However it is trading below its 200dma 20.25. The stock remains weak though short term bullish momentum supports price action. It needs to close above 20.25 for bullish price action to continue
The 52 week high is at 25.00 and the 52week low is at 13.50
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.27 times its book value
– is expected to give good quarter
-Debtor days have improved from 177.46 to 94.20 days.
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -17.25% over past five years.
– has a low return on equity of -25.23% for last 3 years.
-Earnings include an other income of Rs.4.86 Cr.
Competition
– The industry trades at a mean P/E of 46.6x. Bharat Forge trades at the industry’s max P/E of 437.29x. 513472 trades at a P/E of x
– Industry’s mean G-Factor is 3.0 while the mean Piotski score is 8.0. 513472 has a G-Factor of 3 and Piotski scoreof 2.
– Average 1 month return for industry is 11.4%. The max 1- month return was given by Simplex Castings: a return of 22.95 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 39.49 cr compared to Rs 14.67 cr for period ended Mar 2020, a rise of 169.2%
Company reported operating profit of Rs 10.17 cr for period ended Mar 2021, operating profit margin at 25.8 %.
Operating profit was negative for the same period last year thus company has improved its margins this year
The EPS for Mar 2021 was Rs 7.0 compared to Rs 3.56 for previous quarter ended Dec 2020 and Rs -35.72 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 80.56 cr for period ended Mar 2021 vis-vis sales of Rs 54.43 cr for the period ended Mar 2020, a healthy growth of 32.4%. The 3 year sales cagr stood at -28.6%.
Operating margins expanded to 15.8% for period ended Mar 2021 vis-vis -74.57% for period ended Mar 2020, expansion of 9037.0 bps.
Net Profit reported at Rs 1.01 cr for period ended Mar 2021 vis-vis sales of Rs -28.55 cr for the period ended Mar 2020, rising 2926.7%.
Company reported a poor Net Profit CAGR of -32.9% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities: Rs 0.0 cr for period ended Mar 2021 vis-vis Rs -32.35 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has improved its Return on Equity (RoE) metric. The RoE on Last Year basis was -3.0% compared to -25.0% over the last 3 Years. – The stock has given a return of -7% on a 1 Year basis vis-vis a return of -45% over the last 3 Years. – The compounded sales growth on a TTM bassis is 48% vis-vis a compounded sales growth of -29% over the last 3 Years. – The compounded profit growth on a TTM basis is 96% vis-vis a compounded profit growth of % 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 43.46% vis-vis 43.46% for Dec 2020
Conclusion
– Stock is trading at 0.27 times its book value
– is expected to give good quarter
-Debtor days have improved from 177.46 to 94.20 days. – has low interest coverage ratio.
-The company has delivered a poor sales growth of -17.25% over past five years.
– has a low return on equity of -25.23% for last 3 years.
-Earnings include an other income of Rs.4.86 Cr.
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 17.98 and is trading at 19.5 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
