Mehabe score: 6 G Factor: 6 Piotski Score: 7 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 6 and Piotski score of 7.
Description
Vardhman Special Steels is engaged in manufacturing of Billets, Steel bars & Rods and Bright Bars of various categories of special and alloy steels.
Main Points
Manufacturing Capacity: #
Company is amongst leading steel bar producers for automotive applications. It has capacity to make 200,000 MTPA of billets and 200,000 MTPA of rolled bars. Of this, 36,000 MTPA is for bright bars.Site:VSSLMain Symbol:VSSL
Stock trades at 265.0, above its 50dma 234.14. It also trades above its 200dma 169.54. The stock remains bullish on techicals
The 52 week high is at 279.00 and the 52week low is at 54.55
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is expected to give good quarter
– has delivered good profit growth of 53.30% CAGR over last 5 years
Weakness
– The company has delivered a poor sales growth of 7.50% over past five years.
– has a low return on equity of 5.80% for last 3 years.
-Promoter holding has decreased over last 3 years: -5.23%
Competition
– The industry trades at a mean P/E of 15.7x. Apollo Tricoat trades at the industry’s max P/E of 49.27x. VSSL trades at a P/E of 24.3x
– Industry’s mean G-Factor is 6.0 while the mean Piotski score is 8.0. VSSL has a G-Factor of 6 and Piotski scoreof 7.
– Average 1 month return for industry is 8.8%. The max 1- month return was given by Sarda Energy: a return of 24.38 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 330.0 cr compared to Rs 68.0 cr for period ended Jun 2020, a rise of 385.3%
Company reported operating profit of Rs 51.0 cr for period ended Jun 2021, operating profit margin at 15.5 %.
Operating profit was negative for the same period last year thus company has improved its margins this year
The EPS for Jun 2021 was Rs 6.86 compared to Rs 6.51 for previous quarter ended Mar 2021 and Rs -3.16 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1199.0 cr for period ended TTM vis-vis sales of Rs 937.0 cr for the period ended Mar 2021, a healthy growth of 21.9%. The 3 year sales cagr stood at 2.3%.
Operating margins expanded to 14.0% for period ended TTM vis-vis 11.0% for period ended Mar 2021, expansion of 300.0 bps.
Net Profit reported at Rs 85.0 cr for period ended TTM vis-vis sales of Rs 44.0 cr for the period ended Mar 2021, rising 48.2%.
Company recorded a healthy Net Profit CAGR of 56.9% 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 improved its Return on Equity (RoE) metric. The RoE on Last Year basis was 10.0% compared to 6.0% over the last 3 Years. – The stock has given a return of 369% on a 1 Year basis vis-vis a return of 26% over the last 3 Years. – The compounded sales growth on a TTM bassis is 11% vis-vis a compounded sales growth of 3% over the last 3 Years. – The compounded profit growth on a TTM basis is 2143% vis-vis a compounded profit growth of 24% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 0.74% vis-vis 0.0% for Mar 2021 – Public shareholding has risen for the period ended Jun 2021. The Jun 2021 public holding stood at 37.71% vis-vis 32.42% for Mar 2021
Conclusion
– has reduced debt.
– is expected to give good quarter
– has delivered good profit growth of 53.30% CAGR over last 5 years – The company has delivered a poor sales growth of 7.50% over past five years.
– has a low return on equity of 5.80% for last 3 years.
-Promoter holding has decreased over last 3 years: -5.23%
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 234.14 and is trading at 265.0, thus bullish price action wise.
