Mehabe score: 2 G Factor: 3 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 3 and Piotski score of 4.
Description
Gala Global Products Limited is an India-based company engaged in printing of stationery items.Site:539228
Market Cap:
Rs 180 cr
Price:
33.0
Trading pe:
77.5x
Book-value:
7.50/share
Div yield:
0.00 %
Earning yield:
1.34%
Face-value:
5.00/share
52week high:
64.20
52week low:
25.00
Technical Analysis
Stock trades at 33.0, above its 50dma 32.05. However it is trading below its 200dma 37.25. The stock remains weak though short term bullish momentum supports price action. It needs to close above 37.25 for bullish price action to continue
The 52 week high is at 64.20 and the 52week low is at 25.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is almost debt free.
– is expected to give good quarter
-‘s median sales growth is 38.87% of last 10 years
Weakness
– Stock is trading at 4.39 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
– has a low return on equity of 5.68% for last 3 years.
-‘s cost of borrowing seems high
Competition
– The industry trades at a mean P/E of 33.8x. Kokuyo Camlin trades at the industry’s max P/E of 77.53x. 539228 trades at a P/E of 77.5x
– Industry’s mean G-Factor is 3.3 while the mean Piotski score is 7.0. 539228 has a G-Factor of 3 and Piotski scoreof 4.
– Average 1 month return for industry is 9.7%. The max 1- month return was given by Linc Pen &Plast.: a return of 20.45 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 37.07 cr compared to Rs 8.81 cr for period ended Mar 2020, a rise of 320.8%
Company reported operating profit of Rs 0.61 cr for period ended Mar 2021, operating profit margin at 1.6 %.
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 0.05 compared to Rs 0.15 for previous quarter ended Dec 2020 and Rs -0.18 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 105.0 cr for period ended Mar 2021 vis-vis sales of Rs 100.0 cr for the period ended Mar 2020, a growth of 4.8%. The 3 year sales cagr stood at 8.2%.
Operating margins shrank to 4.0% for period ended Mar 2021 vis-vis 5.0% for period ended Mar 2020, contraction of 100.0 bps.
Net Profit reported at Rs 2.0 cr for period ended Mar 2021 vis-vis sales of Rs 2.0 cr for the period ended Mar 2020,
Company reported a poor Net Profit CAGR of -12.6% 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 -2.0 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 had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 6.0% compared to 6.0% over the last 3 Years. – The stock has given a return of -40% on a 1 Year basis vis-vis a return of -5% over the last 3 Years. – The compounded sales growth on a TTM bassis is 5% vis-vis a compounded sales growth of 8% over the last 3 Years. – The compounded profit growth on a TTM basis is 20% vis-vis a compounded profit growth of -3% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Mar 2021 public holding stood at 25.59% vis-vis 25.59% for Dec 2020
Conclusion
– has reduced debt.
– is almost debt free.
– is expected to give good quarter
-‘s median sales growth is 38.87% of last 10 years – Stock is trading at 4.39 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
– has a low return on equity of 5.68% for last 3 years.
-‘s cost of borrowing seems high
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 32.05 and is trading at 33.0 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
