Mehabe score: 3 G Factor: 4 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 4 and Piotski score of 3.
Description
MM Rubber Co is engaged in the business of manufacturing of mattresses, cushions and pillows.(Source : 201903 Annual Report Page No:25)Site:509196
Market Cap:
Rs 41.1 cr
Price:
66.0
Trading pe:
x
Book-value:
23.6/share
Div yield:
0.00 %
Earning yield:
-10.44%
Face-value:
2.00/share
52week high:
70.00
52week low:
26.60
Technical Analysis
Stock trades at 66.0, above its 50dma 62.65. It also trades above its 200dma 50.47. The stock remains bullish on techicals
The 52 week high is at 70.00 and the 52week low is at 26.60
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is almost debt free.
-Debtor days have improved from 30.09 to 22.04 days.
Weakness
– Stock is trading at 2.79 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-Promoter holding is low: 3.30%
– has a low return on equity of -2.40% for last 3 years.
-‘s cost of borrowing seems high
Competition
– The industry trades at a mean P/E of 17.8x. Elgi Rubber Co trades at the industry’s max P/E of 275.91x. 509196 trades at a P/E of x
– Industry’s mean G-Factor is 4.5 while the mean Piotski score is 7.0. 509196 has a G-Factor of 4 and Piotski scoreof 3.
– Average 1 month return for industry is 5.7%. The max 1- month return was given by Pix Transmission: a return of 26.32 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 8.97 cr compared to Rs 6.74 cr for period ended Mar 2020, a rise of 33.1%
Company reported negative operating profit of Rs -0.68 cr for period ended Mar 2021. For same period last year, operating profit was -1.51
The EPS for Mar 2021 was Rs -1.6 compared to Rs -3.45 for previous quarter ended Dec 2020 and Rs -0.13 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 27.93 cr for period ended Mar 2021 vis-vis sales of Rs 29.81 cr for the period ended Mar 2020, a fall of 6.7%. The 3 year sales cagr stood at 3.6%.
Operating margins shrank to -10.99% for period ended Mar 2021 vis-vis -1.85% for period ended Mar 2020, contraction of 914.0 bps.
Net Profit reported at Rs -3.75 cr for period ended Mar 2021 vis-vis sales of Rs 0.22 cr for the period ended Mar 2020, falling 0%.
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 -0.63 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 worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -12.0% compared to -2.0% over the last 3 Years. – The stock has given a return of 98% on a 1 Year basis vis-vis a return of 18% over the last 3 Years. – The compounded sales growth on a TTM bassis is -20% vis-vis a compounded sales growth of 15% over the last 3 Years. – The compounded profit growth on a TTM basis is -535% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Mar 2021 public holding stood at 96.69% vis-vis 96.69% for Dec 2020
Conclusion
– has reduced debt.
– is almost debt free.
-Debtor days have improved from 30.09 to 22.04 days. – Stock is trading at 2.79 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-Promoter holding is low: 3.30%
– has a low return on equity of -2.40% 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 62.65 and is trading at 66.0 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
