Mehabe score: 3 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
SAL Steel is engaged in manufacturing Sponge Iron, Ferro Alloys and power and the products manufactured by the company are sold in the domestic market as well as international market.Site:SALSTEEL
Market Cap:
Rs 54.0 cr
Price:
6.35
Trading pe:
4.67x
Book-value:
3.08/share
Div yield:
0.00 %
Earning yield:
-2.60%
Face-value:
10.0/share
52week high:
6.66
52week low:
2.30
Technical Analysis
Stock trades at 6.35, above its 50dma 5.1. It also trades above its 200dma 4.09. The stock remains bullish on techicals
The 52 week high is at 6.66 and the 52week low is at 2.30
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– has delivered good profit growth of 31.59% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 62.02%
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of -0.26% over past five years.
-Tax rate seems low
-Contingent liabilities of Rs.54.97 Cr.
– might be capitalizing the interest cost
-Promoters have pledged 100.00% of their holding.
Competition
– The industry trades at a mean P/E of 9.3x. Lloyds Metals trades at the industry’s max P/E of 10375.0x. SALSTEEL trades at a P/E of 4.67x
– Industry’s mean G-Factor is 5.2 while the mean Piotski score is 8.0. SALSTEEL has a G-Factor of 2 and Piotski scoreof 6.
– Average 1 month return for industry is 13.9%. The max 1- month return was given by Lloyds Metals: a return of 77.08 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 133.0 cr compared to Rs 109.0 cr for period ended Mar 2020, a rise of 22.0%
Operating Profits reported at Rs 20.0 cr for period ended Mar 2021 vis-vis 2.0 for period ended Mar 2020 .
Operating Margins expanded 1320.3 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 1.83 compared to Rs 0.03 for previous quarter ended Dec 2020 and Rs -0.08 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 323.0 cr for period ended Mar 2021 vis-vis sales of Rs 408.0 cr for the period ended Mar 2020, a fall of 26.3%. The 3 year sales cagr stood at -10.2%.
Operating margins expanded to 7.0% for period ended Mar 2021 vis-vis -4.0% for period ended Mar 2020, expansion of 1100.0 bps.
Net Profit reported at Rs 12.0 cr for period ended Mar 2021 vis-vis sales of Rs 16.0 cr for the period ended Mar 2020, falling 33.3%.
Company reported a poor Net Profit CAGR of -34.1% 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 57.0% compared to 62.0% over the last 3 Years. – The stock has given a return of 57% on a 1 Year basis vis-vis a return of -3% over the last 3 Years. – The compounded sales growth on a TTM bassis is -21% vis-vis a compounded sales growth of -10% over the last 3 Years. – The compounded profit growth on a TTM basis is -27% vis-vis a compounded profit growth of 358% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Mar 2021 public holding stood at 49.44% vis-vis 49.44% for Dec 2020
Conclusion
– has reduced debt.
– has delivered good profit growth of 31.59% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 62.02% – Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of -0.26% over past five years.
-Tax rate seems low
-Contingent liabilities of Rs.54.97 Cr.
– might be capitalizing the interest cost
-Promoters have pledged 100.00% of their holding.
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 5.1 and is trading at 6.35 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
