Home Investment Memo: GIPCL

Investment Memo: GIPCL

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Our Rating: HOLD

Mehabe score: 4
G Factor: 4
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 4 and Piotski score of 6.

Description

Gujarat Industries Power Company Limited is engaged in the generation of electricity. The Company’s gas-based power plants are Vadodara Stations, including Station-I with a capacity of 145 Mega Watts (MW) and Station-II with a capacity of 165 MW.Site: GIPCLMain Symbol: GIPCL

Price Chart

Market Cap: Rs 1,441 cr Price: 95.2 Trading pe: 7.86x
Book-value: 192/share Div yield: 3.04 % Earning yield: 20.18%
Face-value: 10.0/share 52week high: 105.70 52week low: 65.00

Technical Analysis

  • Stock trades at 95.2, above its 50dma 89.21. It also trades above its 200dma 81.01. The stock remains bullish on techicals
  • The 52 week high is at 105.70 and the 52week low is at 65.00

Price Chart

P/E Chart

Sales and Margin

Strengths

– Stock is trading at 0.49 times its book value
– has been maintaining a healthy dividend payout of 21.61%

Weakness

– The company has delivered a poor sales growth of -0.25% over past five years.
– has a low return on equity of 9.20% for last 3 years.
-Debtor days have increased from 62.45 to 80.76 days.

Competition

– The industry trades at a mean P/E of 27.3x. Adani Green trades at the industry’s max P/E of 445.83x. GIPCL trades at a P/E of 7.86x
– Industry’s mean G-Factor is 3.4 while the mean Piotski score is 9.0. GIPCL has a G-Factor of 4 and Piotski scoreof 6.
– Average 1 month return for industry is 5.3%. The max 1- month return was given by JSW Energy: a return of 48.92 %

Quarterly Results

  • Sales for period ended Jun 2021 is Rs 296.0 cr compared to Rs 336.0 cr for period ended Jun 2020, a fall of 11.9%
  • Operating Profits reported at Rs 84.0 cr for period ended Jun 2021 vis-vis 122.0 for period ended Jun 2020 .
  • Operating Margins contracted -793.1 bps for period ended Jun 2021 vis-vis Jun 2020 .
  • The EPS for Jun 2021 was Rs 2.34 compared to Rs 2.92 for previous quarter ended Mar 2021 and Rs 3.93 for Jun 2020

Profit & Loss Statement

Profit&Loss Comments

  • Company reported sales of Rs 1295.0 cr for period ended TTM vis-vis sales of Rs 1335.0 cr for the period ended Mar 2021, a fall of 3.1%. The 3 year sales cagr stood at -2.7%.
  • Operating margins shrank to 31.0% for period ended TTM vis-vis 32.0% for period ended Mar 2021, contraction of 100.0 bps.
  • Net Profit reported at Rs 158.0 cr for period ended TTM vis-vis sales of Rs 180.0 cr for the period ended Mar 2021, falling 13.9%.
  • Company reported a poor Net Profit CAGR of -3.5% 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 193.0 cr for period ended Mar 2021 vis-vis Rs 0.0 cr for period ended Mar 2020

Sales Growth

Profit Growth Statement

Profit Growth Statement

Stock Price CAGR

Return of Equity

General Comments

– The stock has given a return of 35% on a 1 Year basis vis-vis a return of 0% over the last 3 Years.
– The compounded sales growth on a TTM bassis is -3% vis-vis a compounded sales growth of -0% over the last 3 Years.
– The compounded profit growth on a TTM basis is -26% vis-vis a compounded profit growth of -9% over the last 3 Years.

Ratios

Shareholding Pattern

– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 1.59% vis-vis 1.5% for Mar 2021
– Public shareholding has remained largely constant. The Jun 2021 public holding stood at 25.06% vis-vis 23.46% for Mar 2021

Conclusion

– Stock is trading at 0.49 times its book value
– has been maintaining a healthy dividend payout of 21.61% – The company has delivered a poor sales growth of -0.25% over past five years.
– has a low return on equity of 9.20% for last 3 years.
-Debtor days have increased from 62.45 to 80.76 days.

  • 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 89.21 and is trading at 95.2, thus bullish price action wise.
  • Thus, overall we retain a HOLD on the stock.

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