Mehabe score: 5 G Factor: 3 Piotski Score: 5 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 5.
Description
Pokarna established their Granite business in 1991. Their products today are renowned for its quality, uniqueness, design and variation. Their state-of-the-art manufacturing facilities are equipped with specialized Bretonstone® technology, used for producing Quartz surfaces. They have strong presence in 23 countries and a robust distribution network which enables them to maintain uninterrupted and steady supply of products. Their Quartz surfaces are marketed under the brand name Quantra, while their granite products are sold under the Pokarna brand. We also have apparel manufacturing & retailing business under STANZA brand.
Main Points
High contribution from exports
Exports contribute to about 73% of total revenue.#Site:POKARNAMain Symbol:POKARNA
Stock trades at 452.0, above its 50dma 365.68. It also trades above its 200dma 268.44. The stock remains bullish on techicals
The 52 week high is at 477.60 and the 52week low is at 118.05
Price Chart
P/E Chart
Sales and Margin
Strengths
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Weakness
– The company has delivered a poor sales growth of -5.51% over past five years.
– might be capitalizing the interest cost
Competition
– The industry trades at a mean P/E of 27.3x. Jubilant Ingrevia trades at the industry’s max P/E of 153.95x. POKARNA trades at a P/E of 49.6x
– Industry’s mean G-Factor is 3.8 while the mean Piotski score is 9.0. POKARNA has a G-Factor of 3 and Piotski scoreof 5.
– Average 1 month return for industry is 11.8%. The max 1- month return was given by Pokarna: a return of 32.63 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 105.44 cr compared to Rs 27.33 cr for period ended Jun 2020, a rise of 285.8%
Company reported operating profit of Rs 22.57 cr for period ended Jun 2021, operating profit margin at 21.4 %.
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 1.3 compared to Rs 1.22 for previous quarter ended Mar 2021 and Rs -2.99 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 373.0 cr for period ended TTM vis-vis sales of Rs 295.0 cr for the period ended Mar 2021, a healthy growth of 20.9%. The 3 year sales cagr stood at -6.7%.
Operating margins expanded to 29.0% for period ended TTM vis-vis 28.0% for period ended Mar 2021, expansion of 100.0 bps.
Net Profit reported at Rs 42.0 cr for period ended TTM vis-vis sales of Rs 28.0 cr for the period ended Mar 2021, rising 33.3%.
Company reported a poor Net Profit CAGR of -19.7% 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 worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 8.0% compared to 20.0% over the last 3 Years. – The stock has given a return of 211% on a 1 Year basis vis-vis a return of 43% over the last 3 Years. – The compounded sales growth on a TTM bassis is -25% vis-vis a compounded sales growth of -4% over the last 3 Years. – The compounded profit growth on a TTM basis is -60% vis-vis a compounded profit growth of -13% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 1.63% vis-vis 2.13% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 34.64% vis-vis 34.33% for Mar 2021
Conclusion
– – The company has delivered a poor sales growth of -5.51% over past five years.
– might be capitalizing the interest cost
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 365.68 and is trading at 452.0 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
