Mehabe score: 8 G Factor: 8 Piotski Score: 8 The stock has a rating STRONG BUY. 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 8 and Piotski score of 8.
Description
Godawari Power & Ispat is mainly engaged in the business of Mining of Iron Ore and Manufacturing of Iron Ore Pellets, Sponge Iron, Steel Billets, Wire Rods, H.B. Wire and Ferro Alloys with generation of Electricity.
Main Points
Captive Iron Ore Mines:
Company has two capitve mines- Ari Dongri Mine & Boria Tibu Mine.
GPIL sources 85% of its iron ore needs captively from its mines for the production of steel.
Captive mining leads to huge raw material costs saving.
Subsidiary-ASL has to rely on merchant mines for its RM needs.Site:GPILMain Symbol:GPIL
Stock trades at 1690.0, above its 50dma 1273.71. It also trades above its 200dma 821.77. The stock remains bullish on techicals
The 52 week high is at 1734.00 and the 52week low is at 165.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– has delivered good profit growth of 55.89% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 26.55%
Weakness
– Promoters have pledged 32.51% of their holding.
Competition
– The industry trades at a mean P/E of 15.3x. Apollo Tricoat trades at the industry’s max P/E of 45.29x. GPIL trades at a P/E of 9.33x
– Industry’s mean G-Factor is 6.3 while the mean Piotski score is 8.0. GPIL has a G-Factor of 8 and Piotski scoreof 8.
– Average 1 month return for industry is 7.4%. The max 1- month return was given by Godawari Power: a return of 27.62 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 1262.0 cr compared to Rs 790.0 cr for period ended Mar 2020, a rise of 59.7%
Operating Profits reported at Rs 490.0 cr for period ended Mar 2021 vis-vis 156.0 for period ended Mar 2020 .
Operating Margins expanded 1908.0 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 92.79 compared to Rs 45.64 for previous quarter ended Dec 2020 and Rs 9.47 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 4072.0 cr for period ended Mar 2021 vis-vis sales of Rs 3270.0 cr for the period ended Mar 2020, a healthy growth of 19.7%. The 3 year sales cagr stood at 17.6%.
Operating margins expanded to 30.0% for period ended Mar 2021 vis-vis 19.0% for period ended Mar 2020, expansion of 1100.0 bps.
Net Profit reported at Rs 638.0 cr for period ended Mar 2021 vis-vis sales of Rs 167.0 cr for the period ended Mar 2020, rising 73.8%.
Company recorded a healthy Net Profit CAGR of 45.3% 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 969.0 cr for period ended Mar 2021 vis-vis Rs 551.0 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 improved its Return on Equity (RoE) metric. The RoE on Last Year basis was 38.0% compared to 27.0% over the last 3 Years. – The stock has given a return of 913% on a 1 Year basis vis-vis a return of 57% over the last 3 Years. – The compounded sales growth on a TTM bassis is 25% vis-vis a compounded sales growth of 18% over the last 3 Years. – The compounded profit growth on a TTM basis is 271% vis-vis a compounded profit growth of 44% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 1.15% vis-vis 0.62% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 30.35% vis-vis 31.33% for Mar 2021
Conclusion
– has reduced debt.
– has delivered good profit growth of 55.89% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 26.55% – Promoters have pledged 32.51% of their holding.
Fundamentally, the stock remains a Strong ‘BUY’ in our long term portoflio.
Technically too, the stock is a Strong ‘BUY’ in our long term portoflio.The stock remains above its 50 DMA 1273.71 and is trading at 1690.0
Thus, overall, we retain a STRONG BUY on the stock. Any dips can be used to build positions.
