Home Investment Memo: BOROLTD

Investment Memo: BOROLTD

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Our Rating: HOLD

Mehabe score: 5
G Factor: 5
Piotski Score: 6
The stock has a rating 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 5 and Piotski score of 6.

Description

Borosil Limited is a supplier of laboratory glassware, microwaveable kitchenware and opal ware in India. It sells and markets microwavable and flameproof kitchenware and glass tumblers through more than 15,000 retail outlets, and has three manufacturing facilities.
The company conducts its operations in two business segments—namely, scientific & industrial products and consumer products

Main Points

Demerger to focus on key segments #
In FY20, The Consumer Product Division(CPD) and Scientific and Industrial product(SIP) segment of Borosil Glass work Limited was demerged which resulted in a better capital structure within the Borosil group of companies.Site: BOROLTDMain Symbol: BOROLTD

Price Chart

Market Cap: Rs 2,555 cr Price: 224.0 Trading pe: 62.7x
Book-value: 61.3/share Div yield: 0.45 % Earning yield: 2.48%
Face-value: 1.00/share 52week high: 254.00 52week low: 130.00

Technical Analysis

  • Stock trades at 224.0, above its 50dma 218.76. It also trades above its 200dma 202.25. The stock remains bullish on techicals
  • The 52 week high is at 254.00 and the 52week low is at 130.00

Price Chart

P/E Chart

Sales and Margin

Strengths

– has reduced debt.
– is almost debt free.
-Debtor days have improved from 57.15 to 37.28 days.

Weakness

– Stock is trading at 3.65 times its book value
– has a low return on equity of 6.75% for last 3 years.

Competition

– The industry trades at a mean P/E of 38.5x. La Opala RG trades at the industry’s max P/E of 66.23x. BOROLTD trades at a P/E of 62.7x
– Industry’s mean G-Factor is 2.9 while the mean Piotski score is 8.0. BOROLTD has a G-Factor of 5 and Piotski scoreof 6.
– Average 1 month return for industry is 2.5%. The max 1- month return was given by Borosil Renew.: a return of 14.63 %

Quarterly Results

  • Sales for period ended Mar 2021 is Rs 168.0 cr compared to Rs 130.0 cr for period ended Mar 2020, a rise of 29.2%
  • The EPS for Mar 2021 was Rs 1.57 compared to Rs 1.91 for previous quarter ended Dec 2020 and Rs -0.56 for Mar 2020

Profit & Loss Statement

Profit&Loss Comments

  • Company reported sales of Rs 527.0 cr for period ended Mar 2021 vis-vis sales of Rs 585.0 cr for the period ended Mar 2020, a fall of 11.0%. The 3 year sales cagr stood at 73.4%.
  • Net Profit reported at Rs 41.0 cr for period ended Mar 2021 vis-vis sales of Rs 41.0 cr for the period ended Mar 2020,

Balance Sheet Statement

Cash Flow Statement

Cash Flow comments

  • CashFlow from operating activities was positive.
  • CashFlow from operating activities: Rs 180.0 cr for period ended Mar 2021 vis-vis Rs 50.0 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 had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 6.0% compared to 7.0% over the last 3 Years.
– The stock has given a return of 63% on a 1 Year basis vis-vis a return of % over the last 3 Years.
– The compounded sales growth on a TTM bassis is -10% vis-vis a compounded sales growth of 74% over the last 3 Years.
– The compounded profit growth on a TTM basis is -6% vis-vis a compounded profit growth of 158% over the last 3 Years.

Ratios

Shareholding Pattern

– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 1.97% vis-vis 2.07% for Mar 2021
– Public shareholding has remained largely constant. The Jun 2021 public holding stood at 27.3% vis-vis 27.2% for Mar 2021

Conclusion

– has reduced debt.
– is almost debt free.
-Debtor days have improved from 57.15 to 37.28 days. – Stock is trading at 3.65 times its book value
– has a low return on equity of 6.75% for last 3 years.

  • The business fundamentals of the stock remain stable. Stronger near term results will build interest in the stock. We suggest to wait for a upturn in business performance.
  • Technically, the stock remains above its 50 DMA 218.76 and is trading at 224.0, thus bullish price action wise.
  • Thus, overall we retain a HOLD on the stock.

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