Mehabe score: 4 G Factor: 3 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 3 and Piotski score of 3.
Description
Welcast Steels is primarily involved in manufacturing of High Chrome Grinding Media Balls used in mill Internals of cement and mining industry.Site:504988Main Symbol:ZWELCAST
Stock trades at 485.0, above its 50dma 448.35. It also trades above its 200dma 412.41. The stock remains bullish on techicals
The 52 week high is at 603.75 and the 52week low is at 288.60
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
-Stock is trading at 0.94 times its book value
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -3.92% over past five years.
– has a low return on equity of -0.41% for last 3 years.
-Debtor days have increased from 30.66 to 52.13 days.
Competition
– The industry trades at a mean P/E of 43.6x. Grindwell Norton trades at the industry’s max P/E of 49.96x. 504988 trades at a P/E of x
– Industry’s mean G-Factor is 3.0 while the mean Piotski score is 8.0. 504988 has a G-Factor of 3 and Piotski scoreof 3.
– Average 1 month return for industry is 10.3%. The max 1- month return was given by Welcast Steels: a return of 24.75 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 24.69 cr compared to Rs 27.93 cr for period ended Mar 2020, a fall of 11.6%
Company reported negative operating profit of Rs -1.04 cr for period ended Mar 2021. For same period last year, operating profit was -0.05
The EPS for Mar 2021 was Rs -19.43 compared to Rs 43.09 for previous quarter ended Dec 2020 and Rs -7.68 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 97.95 cr for period ended Mar 2021 vis-vis sales of Rs 150.02 cr for the period ended Mar 2020, a fall of 53.2%. The 3 year sales cagr stood at -25.2%.
Operating margins shrank to -0.15% for period ended Mar 2021 vis-vis 0.6% for period ended Mar 2020, contraction of 75.0 bps.
Net Profit reported at Rs -1.82 cr for period ended Mar 2021 vis-vis sales of Rs -0.26 cr for the period ended Mar 2020, falling 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 2.07 cr for period ended Mar 2021 vis-vis Rs -0.2 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 -5.0% compared to -0.0% over the last 3 Years. – The stock has given a return of 43% on a 1 Year basis vis-vis a return of -12% over the last 3 Years. – The compounded sales growth on a TTM bassis is -35% vis-vis a compounded sales growth of -25% over the last 3 Years. – The compounded profit growth on a TTM basis is -333% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Jun 2021 public holding stood at 25.14% vis-vis 25.14% for Mar 2021
Conclusion
– is almost debt free.
-Stock is trading at 0.94 times its book value – has low interest coverage ratio.
-The company has delivered a poor sales growth of -3.92% over past five years.
– has a low return on equity of -0.41% for last 3 years.
-Debtor days have increased from 30.66 to 52.13 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 448.35 and is trading at 485.0 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
