Mehabe score: 2 G Factor: 2 Piotski Score: 6 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 6.
Description
Tamil Nadu Newsprint & Papers Ltd is in the business of manufacture and marketing of Paper, Paper Board, Cement and Generation of Power.#
Main Points
Product Portfolio
The company produces a wide portfolio of high quality papers for printing and writing; and coated and uncoated paperboards best suited for packaging industry.#Site:TNPL
Market Cap:
Rs 1,198 cr
Price:
173.0
Trading pe:
x
Book-value:
247/share
Div yield:
3.47 %
Earning yield:
3.39%
Face-value:
10.0/share
52week high:
182.90
52week low:
98.00
Technical Analysis
Stock trades at 173.0, above its 50dma 151.81. It also trades above its 200dma 136.3. The stock remains bullish on techicals
The 52 week high is at 182.90 and the 52week low is at 98.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.70 times its book value
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of 2.75% over past five years.
– has a low return on equity of 3.70% for last 3 years.
-Contingent liabilities of Rs.805.98 Cr.
-Dividend payout has been low at 7.75% of profits over last 3 years
-Debtor days have increased from 54.84 to 69.56 days.
Competition
– The industry trades at a mean P/E of 20.9x. Century Textiles trades at the industry’s max P/E of 62.39x. TNPL trades at a P/E of x
– Industry’s mean G-Factor is 4.3 while the mean Piotski score is 7.0. TNPL has a G-Factor of 2 and Piotski scoreof 6.
– Average 1 month return for industry is 14.8%. The max 1- month return was given by JK Paper: a return of 30.03 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 1124.32 cr compared to Rs 901.17 cr for period ended Mar 2020, a rise of 24.8%
Operating Profits reported at Rs 83.18 cr for period ended Mar 2021 vis-vis 109.5 for period ended Mar 2020 .
Operating Margins contracted -475.3 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs -0.57 compared to Rs -4.57 for previous quarter ended Dec 2020 and Rs 0.27 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 2768.0 cr for period ended Mar 2021 vis-vis sales of Rs 3471.0 cr for the period ended Mar 2020, a fall of 25.4%. The 3 year sales cagr stood at -3.7%.
Operating margins shrank to 9.0% for period ended Mar 2021 vis-vis 18.0% for period ended Mar 2020, contraction of 900.0 bps.
Net Profit reported at Rs -65.0 cr for period ended Mar 2021 vis-vis sales of Rs 130.0 cr for the period ended Mar 2020, falling 0%.
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 worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -5.0% compared to 4.0% over the last 3 Years. – The stock has given a return of 49% 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 -20% vis-vis a compounded sales growth of -4% over the last 3 Years. – The compounded profit growth on a TTM basis is -164% vis-vis a compounded profit growth of -76% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 1.05% vis-vis 1.31% for Dec 2020 – Public shareholding has risen for the period ended Mar 2021. The Mar 2021 public holding stood at 34.02% vis-vis 30.1% for Dec 2020
Conclusion
– Stock is trading at 0.70 times its book value – has low interest coverage ratio.
-The company has delivered a poor sales growth of 2.75% over past five years.
– has a low return on equity of 3.70% for last 3 years.
-Contingent liabilities of Rs.805.98 Cr.
-Dividend payout has been low at 7.75% of profits over last 3 years
-Debtor days have increased from 54.84 to 69.56 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 151.81 and is trading at 173.0 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
