Mehabe score: 5 G Factor: 6 Piotski Score: 3 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 6 and Piotski score of 3.
Description
Suraj Products is engaged in production of sponge iron by direct reduction of iron ore, pig iron, ingots & generation of power form waste heat.
Main Points
Manufacturing Capacity
The Company’s pig iron plant has an installed capacity of 24,000 tons per annum and a sponge iron plant with a total capacity of 45,000 tons per annum. The Company’s manufacturing plant is located at Sundergarh district, Odisha. #Site:518075
Market Cap:
Rs 68.4 cr
Price:
60.0
Trading pe:
7.3x
Book-value:
42.3/share
Div yield:
0.00 %
Earning yield:
11.53%
Face-value:
10.0/share
52week high:
60.25
52week low:
9.00
Technical Analysis
Stock trades at 60.0, above its 50dma 43.34. It also trades above its 200dma 32.06. The stock remains bullish on techicals
The 52 week high is at 60.25 and the 52week low is at 9.00
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
-Tax rate seems low
– has a low return on equity of 13.38% for last 3 years.
Competition
– The industry trades at a mean P/E of 11.6x. Lloyds Metals trades at the industry’s max P/E of 8564.73x. 518075 trades at a P/E of 7.3x
– Industry’s mean G-Factor is 5.1 while the mean Piotski score is 8.0. 518075 has a G-Factor of 6 and Piotski scoreof 3.
– Average 1 month return for industry is 16.0%. The max 1- month return was given by Lloyds Metals: a return of 89.25 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 71.24 cr compared to Rs 45.15 cr for period ended Mar 2020, a rise of 57.8%
Operating Profits reported at Rs 10.83 cr for period ended Mar 2021 vis-vis 5.4 for period ended Mar 2020 .
Operating Margins expanded 324.2 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 2.66 compared to Rs 2.97 for previous quarter ended Dec 2020 and Rs 2.84 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 218.0 cr for period ended Mar 2021 vis-vis sales of Rs 118.0 cr for the period ended Mar 2020, a healthy growth of 45.9%. The 3 year sales cagr stood at 46.0%.
Net Profit reported at Rs 9.0 cr for period ended Mar 2021 vis-vis sales of Rs 5.0 cr for the period ended Mar 2020, rising 44.4%.
Company recorded a healthy Net Profit CAGR of 31.0% 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 12.0% compared to 13.0% over the last 3 Years. – The stock has given a return of 525% 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 74% vis-vis a compounded sales growth of 25% over the last 3 Years. – The compounded profit growth on a TTM basis is 183% vis-vis a compounded profit growth of 77% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Mar 2021 public holding stood at 26.3% vis-vis 26.3% for Dec 2020
Conclusion
– is expected to give good quarter – Though the company is reporting repeated profits, it is not paying out dividend
-Tax rate seems low
– has a low return on equity of 13.38% for 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 43.34 and is trading at 60.0 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
