Mehabe score: 4 G Factor: 2 Piotski Score: 5 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 5.
Description
Shankara Building Products is one of the India’s leading organized retailers of home improvement and building products in India. It caters to a large customer base spread across various end-user segments in urban and semi-urban markets through a retail led, multi-channel sales approach complemented by processing facilities, supply chain and logistics facilities. It deals with a number of product categories including structural steel, cement, TMT bars, hollow blocks, pipes and tubes, roofing solutions, welding accessories, primers, solar heaters, plumbing materials, tiles, sanitary ware, water tanks, plywood, kitchen sinks, lighting and other allied products.Site:SHANKARAMain Symbol:SHANKARA
Stock trades at 447.0, above its 50dma 430.04. It also trades above its 200dma 395.27. The stock remains bullish on techicals
The 52 week high is at 518.30 and the 52week low is at 279.65
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of 0.02% over past five years.
– has a low return on equity of 5.82% for last 3 years.
-Dividend payout has been low at 7.31% of profits over last 3 years
-‘s cost of borrowing seems high
Competition
– The industry trades at a mean P/E of 50.4x. 3M India trades at the industry’s max P/E of 186.22x. SHANKARA trades at a P/E of 73.8x
– Industry’s mean G-Factor is 3.8 while the mean Piotski score is 7.0. SHANKARA has a G-Factor of 2 and Piotski scoreof 5.
– Average 1 month return for industry is 0.9%. The max 1- month return was given by Redington India: a return of 21.85 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 642.0 cr compared to Rs 667.0 cr for period ended Mar 2020, a fall of 3.7%
Operating Profits reported at Rs 26.0 cr for period ended Mar 2021 vis-vis 27.0 for period ended Mar 2020 .
Operating Margins expanded 0.2 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 4.84 compared to Rs 9.55 for previous quarter ended Dec 2020 and Rs 4.95 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 2038.0 cr for period ended Mar 2021 vis-vis sales of Rs 2640.0 cr for the period ended Mar 2020, a fall of 29.5%. The 3 year sales cagr stood at -7.2%.
Operating margins shrank to 3.0% for period ended Mar 2021 vis-vis 4.0% for period ended Mar 2020, contraction of 100.0 bps.
Net Profit reported at Rs 14.0 cr for period ended Mar 2021 vis-vis sales of Rs 40.0 cr for the period ended Mar 2020, falling 185.7%.
Company reported a poor Net Profit CAGR of -42.6% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 133.0 cr for period ended Mar 2021 vis-vis Rs -30.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The stock has given a return of 20% on a 1 Year basis vis-vis a return of -34% over the last 3 Years. – The compounded sales growth on a TTM bassis is -23% vis-vis a compounded sales growth of -7% over the last 3 Years. – The compounded profit growth on a TTM basis is -65% vis-vis a compounded profit growth of -43% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 23.68% vis-vis 23.65% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 15.54% vis-vis 15.57% for Dec 2020
Conclusion
– has reduced debt. – has low interest coverage ratio.
-The company has delivered a poor sales growth of 0.02% over past five years.
– has a low return on equity of 5.82% for last 3 years.
-Dividend payout has been low at 7.31% of profits over 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 430.04 and is trading at 447.0 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
