Investment Memo: IVC

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Our Rating: OBSERVE & HOLD

Mehabe score: 4
G Factor: 3
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 3 and Piotski score of 3.

Description

IL&FS Investment Managers is a domestic private equity fund management companies which manages funds on behalf of leading Indian and International Institutions.Site: IVC

Market Cap: Rs 187 cr Price: 6.05 Trading pe: 23.1x
Book-value: 7.13/share Div yield: 9.92 % Earning yield: 38.05%
Face-value: 2.00/share 52week high: 6.75 52week low: 2.85

Technical Analysis

  • Stock trades at 6.05, above its 50dma 5.52. It also trades above its 200dma 4.76. The stock remains bullish on techicals
  • The 52 week high is at 6.75 and the 52week low is at 2.85

Price Chart

P/E Chart

Sales and Margin

Strengths

– is almost debt free.
-Stock is trading at 0.85 times its book value
-Debtor days have improved from 152.97 to 81.12 days.

Weakness

– The company has delivered a poor sales growth of -25.66% over past five years.
– has a low return on equity of -1.77% for last 3 years.
-Promoters have pledged 100.00% of their holding.
-Earnings include an other income of Rs.13.58 Cr.

Competition

– The industry trades at a mean P/E of 24.5x. SBI Cards trades at the industry’s max P/E of 92.78x. IVC trades at a P/E of 23.1x
– Industry’s mean G-Factor is 4.4 while the mean Piotski score is 7.0. IVC has a G-Factor of 3 and Piotski scoreof 3.
– Average 1 month return for industry is 1.7%. The max 1- month return was given by Muthoot Finance: a return of 12.97 %

Quarterly Results

  • Sales for period ended Mar 2021 is Rs 15.64 cr compared to Rs 9.32 cr for period ended Mar 2020, a rise of 67.8%
  • Company reported operating profit of Rs 2.22 cr for period ended Mar 2021, operating profit margin at 14.2 %.
  • 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 0.14 compared to Rs 0.01 for previous quarter ended Dec 2020 and Rs 0.15 for Mar 2020

Profit & Loss Statement

Profit&Loss Comments

  • Company reported sales of Rs 46.13 cr for period ended TTM vis-vis sales of Rs 44.86 cr for the period ended Mar 2020, a growth of 2.8%. The 3 year sales cagr stood at -26.4%.
  • Operating margins expanded to -4.96% for period ended TTM vis-vis -51.36% for period ended Mar 2020, expansion of 4640.0 bps.
  • Net Profit reported at Rs 7.86 cr for period ended TTM vis-vis sales of Rs -13.86 cr for the period ended Mar 2020, rising 276.3%.
  • Company reported a poor Net Profit CAGR of -19.8% 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 worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -6.0% compared to -2.0% over the last 3 Years.
    – The stock has given a return of 78% on a 1 Year basis vis-vis a return of -25% over the last 3 Years.
    – The compounded sales growth on a TTM bassis is -23% vis-vis a compounded sales growth of -26% over the last 3 Years.
    – The compounded profit growth on a TTM basis is 191% 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 49.57% vis-vis 49.57% for Dec 2020

    Conclusion

    – is almost debt free.
    -Stock is trading at 0.85 times its book value
    -Debtor days have improved from 152.97 to 81.12 days. – The company has delivered a poor sales growth of -25.66% over past five years.
    – has a low return on equity of -1.77% for last 3 years.
    -Promoters have pledged 100.00% of their holding.
    -Earnings include an other income of Rs.13.58 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 5.52 and is trading at 6.05 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
    • Thus, overall, we retain a OBSERVE & HOLD.

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