Mehabe score: 6 G Factor: 3 Piotski Score: 7 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 7.
Description
Rain Industries Limited (RAIN) is a leading vertically integrated producer of carbon, cement and Advanced materials products. Headquartered in India, RAIN has manufacturing facilities in eight countries across three continents. #
Main Points
Manufacturing Capabilities
The company owns and operates a total of 18 manufacturing facilities which manufactures products for its 3 business segments. These facilities are established across North America, Europe and Asia. #
Its current manufacturing capacities are –Site:RAINMain Symbol:RAIN
Stock trades at 262.0, above its 50dma 211.32. It also trades above its 200dma 164.0. The stock remains bullish on techicals
The 52 week high is at 269.50 and the 52week low is at 89.40
Price Chart
P/E Chart
Sales and Margin
Strengths
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Weakness
– The company has delivered a poor sales growth of 0.50% over past five years.
– has a low return on equity of 10.63% for last 3 years.
– might be capitalizing the interest cost
-Dividend payout has been low at 6.80% of profits over last 3 years
Competition
– The industry trades at a mean P/E of 48.3x. 3M India trades at the industry’s max P/E of 187.55x. RAIN trades at a P/E of 13.4x
– Industry’s mean G-Factor is 3.7 while the mean Piotski score is 7.0. RAIN has a G-Factor of 3 and Piotski scoreof 7.
– Average 1 month return for industry is 4.2%. The max 1- month return was given by Rain Industries: a return of 36.33 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 3643.0 cr compared to Rs 2361.0 cr for period ended Jun 2020, a rise of 54.3%
Operating Profits reported at Rs 650.0 cr for period ended Jun 2021 vis-vis 352.0 for period ended Jun 2020 .
Operating Margins expanded 293.4 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 7.0 compared to Rs 6.13 for previous quarter ended Mar 2021 and Rs 0.79 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 11858.0 cr for period ended TTM vis-vis sales of Rs 10465.0 cr for the period ended Dec 2020, a healthy growth of 11.7%. The 3 year sales cagr stood at -5.5%.
Operating margins expanded to 18.0% for period ended TTM vis-vis 16.0% for period ended Dec 2020, expansion of 200.0 bps.
Net Profit reported at Rs 867.0 cr for period ended TTM vis-vis sales of Rs 558.0 cr for the period ended Dec 2020, rising 35.6%.
Company recorded a healthy Net Profit CAGR of 14.2% over the last 3 years
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 had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 11.0% compared to 11.0% over the last 3 Years. – The stock has given a return of 184% 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 -12% vis-vis a compounded sales growth of -3% over the last 3 Years. – The compounded profit growth on a TTM basis is 53% vis-vis a compounded profit growth of -14% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has fallen for the period ended Jun 2021. The Jun 2021 fii holding stood at 10.61% vis-vis 13.9% for Mar 2021 – Public shareholding has risen for the period ended Jun 2021. The Jun 2021 public holding stood at 48.16% vis-vis 44.05% for Mar 2021
Conclusion
– – The company has delivered a poor sales growth of 0.50% over past five years.
– has a low return on equity of 10.63% for last 3 years.
– might be capitalizing the interest cost
-Dividend payout has been low at 6.80% of profits over last 3 years
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 211.32 and is trading at 262.0 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
