Mehabe score: 5 G Factor: 3 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 3 and Piotski score of 5.
Description
Rane Engine Valve is engaged in manufacture of engine valves, Guides and Tappets for passenger cars, commercial vehicles, farm tractors, stationery engines, railway/marine engines and two/three wheelers and as such operates in a single reportable business segment of components for transportation industry.Site:RANEENGINEMain Symbol:RANEENGINE
Stock trades at 342.0, above its 50dma 308.33. It also trades above its 200dma 272.25. The stock remains bullish on techicals
The 52 week high is at 386.40 and the 52week low is at 178.25
Price Chart
P/E Chart
Sales and Margin
Strengths
– is expected to give good quarter
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -2.60% over past five years.
– has a low return on equity of -16.12% for last 3 years.
– might be capitalizing the interest cost
-Earnings include an other income of Rs.25.64 Cr.
-Debtor days have increased from 76.69 to 93.53 days.
Competition
– The industry trades at a mean P/E of 32.9x. WABCO India trades at the industry’s max P/E of 132.08x. RANEENGINE trades at a P/E of x
– Industry’s mean G-Factor is 4.0 while the mean Piotski score is 7.0. RANEENGINE has a G-Factor of 3 and Piotski scoreof 5.
– Average 1 month return for industry is 3.0%. The max 1- month return was given by Minda Industries: a return of 13.35 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 75.43 cr compared to Rs 30.28 cr for period ended Jun 2020, a rise of 149.1%
Company reported negative operating profit of Rs -2.83 cr for period ended Jun 2021. For same period last year, operating profit was -16.76
The EPS for Jun 2021 was Rs -8.62 compared to Rs -0.73 for previous quarter ended Mar 2021 and Rs -24.27 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 347.0 cr for period ended TTM vis-vis sales of Rs 302.0 cr for the period ended Mar 2021, a healthy growth of 13.0%. The 3 year sales cagr stood at -6.4%.
Operating margins expanded to 3.0% for period ended TTM vis-vis -1.0% for period ended Mar 2021, expansion of 400.0 bps.
Net Profit reported at Rs 4.0 cr for period ended TTM vis-vis sales of Rs -6.0 cr for the period ended Mar 2021, rising 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
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 -26.0% compared to -16.0% over the last 3 Years. – The stock has given a return of 75% on a 1 Year basis vis-vis a return of -11% 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 63% vis-vis a compounded profit growth of -30% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Jun 2021 public holding stood at 43.46% vis-vis 43.46% for Mar 2021
Conclusion
– is expected to give good quarter – has low interest coverage ratio.
-The company has delivered a poor sales growth of -2.60% over past five years.
– has a low return on equity of -16.12% for last 3 years.
– might be capitalizing the interest cost
-Earnings include an other income of Rs.25.64 Cr.
-Debtor days have increased from 76.69 to 93.53 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 308.33 and is trading at 342.0 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
