Mehabe score: 3 G Factor: 0 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 0 and Piotski score of 3.
Description
Kothari Products Limited is engaged in wholesale trading of coal; wholesale trading of oil; wholesale trading of construction materials and wholesale trading of machine and spares.Site:KOTHARIPROMain Symbol:KOTHARIPRO
Stock trades at 123.0, above its 50dma 89.28. It also trades above its 200dma 74.59. The stock remains bullish on techicals
The 52 week high is at 137.45 and the 52week low is at 51.20
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.33 times its book value
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -9.12% over past five years.
– has a low return on equity of 6.59% for last 3 years.
-Contingent liabilities of Rs.420.00 Cr.
– might be capitalizing the interest cost
-Dividend payout has been low at 3.50% of profits over last 3 years
– has high debtors of 186.63 days.
Competition
– The industry trades at a mean P/E of 49.5x. 3M India trades at the industry’s max P/E of 184.63x. KOTHARIPRO trades at a P/E of x
– Industry’s mean G-Factor is 3.5 while the mean Piotski score is 7.0. KOTHARIPRO has a G-Factor of 0 and Piotski scoreof 3.
– Average 1 month return for industry is 9.4%. The max 1- month return was given by Kothari Products: a return of 49.97 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 958.0 cr compared to Rs 898.0 cr for period ended Mar 2020, a rise of 6.7%
Company reported negative operating profit of Rs -27.0 cr for period ended Mar 2021. For same period last year, operating profit was -67.0
The EPS for Mar 2021 was Rs 24.19 compared to Rs -28.62 for previous quarter ended Dec 2020 and Rs 5.58 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 3117.0 cr for period ended Mar 2021 vis-vis sales of Rs 4113.0 cr for the period ended Mar 2020, a fall of 32.0%. The 3 year sales cagr stood at -21.2%.
Operating margins shrank to -3.0% for period ended Mar 2021 vis-vis -1.0% for period ended Mar 2020, contraction of 200.0 bps.
Net Profit reported at Rs -56.0 cr for period ended Mar 2021 vis-vis sales of Rs 35.0 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 -63.0 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 3.0% compared to 7.0% over the last 3 Years. – The stock has given a return of 93% on a 1 Year basis vis-vis a return of -1% over the last 3 Years. – The compounded sales growth on a TTM bassis is -34% vis-vis a compounded sales growth of -13% over the last 3 Years. – The compounded profit growth on a TTM basis is -138% vis-vis a compounded profit growth of -20% 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 25.01% vis-vis 25.01% for Dec 2020
Conclusion
– Stock is trading at 0.33 times its book value – has low interest coverage ratio.
-The company has delivered a poor sales growth of -9.12% over past five years.
– has a low return on equity of 6.59% for last 3 years.
-Contingent liabilities of Rs.420.00 Cr.
– might be capitalizing the interest cost
-Dividend payout has been low at 3.50% of profits over last 3 years
– has high debtors of 186.63 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 89.28 and is trading at 123.0 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
