Mehabe score: 7 G Factor: 2 Piotski Score: 6 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 2 and Piotski score of 6.
Description
Sar Auto Products Ltd was incorporated in 1987 by Mr. Ramesh D. Virani(current chairman) in Rajkot, Gujarat. It is mainly engaged in the manufacturing and selling of Auto components like gears for transmission, differential & engines. It is also engaged in real estate construction #
Main Points
Products
It manufactures Auto Components comprising automobile gears like Spur Gear, Helical Gear, etc along with Transmission Spline Shafts, Couplings, Engine, Differential gearboxes, and Power Take-off clutches which are used for Transmission, and manufactures machined parts up to 480mm dia.Site:538992Main Symbol:SAPL
Stock trades at 295.0, above its 50dma 279.63. It also trades above its 200dma 267.99. The stock remains bullish on techicals
The 52 week high is at 355.00 and the 52week low is at 189.05
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
Weakness
– Stock is trading at 10.03 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
– has a low return on equity of 2.05% for last 3 years.
-Earnings include an other income of Rs.0.37 Cr.
-Debtor days have increased from 112.54 to 143.74 days.
Competition
– The industry trades at a mean P/E of 27.3x. Sar Auto Prod. trades at the industry’s max P/E of 1405.6x. 538992 trades at a P/E of 1406.0x
– Industry’s mean G-Factor is 3.5 while the mean Piotski score is 7.0. 538992 has a G-Factor of 2 and Piotski scoreof 6.
– Average 1 month return for industry is 1.0%. The max 1- month return was given by Minda Industries: a return of 9.37 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 2.5 cr compared to Rs 0.57 cr for period ended Jun 2020, a rise of 338.6%
Operating Profits reported at Rs 0.58 cr for period ended Jun 2021 vis-vis 0.06 for period ended Jun 2020 .
Operating Margins expanded 1267.4 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 0.71 compared to Rs 0.78 for previous quarter ended Mar 2021 and Rs -0.29 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 8.23 cr for period ended TTM vis-vis sales of Rs 6.3 cr for the period ended Mar 2021, a healthy growth of 23.5%. The 3 year sales cagr stood at -5.7%.
Operating margins expanded to 23.33% for period ended TTM vis-vis 22.22% for period ended Mar 2021, expansion of 111.0 bps.
Net Profit reported at Rs 0.93 cr for period ended TTM vis-vis sales of Rs 0.45 cr for the period ended Mar 2021, rising 51.6%.
Company recorded a healthy Net Profit CAGR of 41.3% 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 1.13 cr for period ended Mar 2021 vis-vis Rs 0.68 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 2.0% compared to 2.0% over the last 3 Years. – The stock has given a return of -21% on a 1 Year basis vis-vis a return of 19% over the last 3 Years. – The compounded sales growth on a TTM bassis is -28% vis-vis a compounded sales growth of 10% over the last 3 Years. – The compounded profit growth on a TTM basis is 140% vis-vis a compounded profit growth of -1% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Jun 2021 public holding stood at 20.89% vis-vis 20.9% for Mar 2021
Conclusion
– is almost debt free. – Stock is trading at 10.03 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
– has a low return on equity of 2.05% for last 3 years.
-Earnings include an other income of Rs.0.37 Cr.
-Debtor days have increased from 112.54 to 143.74 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 279.63 and is trading at 295.0 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
