Mehabe score: 6 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
STEEL EXCHANGE INDIA LTD has been established in the field of iron and steel manufacturing and is the AP’s largest private integrated steel plant. The company aims to grow as a quality steel product hub, increasing the customer base and clientele organizations.Site:STEELXINDMain Symbol:STEELXIND
Stock trades at 82.0, above its 50dma 68.08. It also trades above its 200dma 54.84. The stock remains bullish on techicals
The 52 week high is at 85.50 and the 52week low is at 29.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is expected to give good quarter
– has delivered good profit growth of 63.79% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 27.14%
-Promoter holding has increased by 4.80% over last quarter.
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of -11.54% over past five years.
-Tax rate seems low
– might be capitalizing the interest cost
-Promoters have pledged 81.97% of their holding.
-Earnings include an other income of Rs.77.49 Cr.
Competition
– The industry trades at a mean P/E of 48.1x. 3M India trades at the industry’s max P/E of 185.06x. STEELXIND trades at a P/E of 8.33x
– Industry’s mean G-Factor is 4.1 while the mean Piotski score is 7.0. STEELXIND has a G-Factor of 5 and Piotski scoreof 6.
– Average 1 month return for industry is -1.7%. The max 1- month return was given by Steel Exchange: a return of 16.55 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 262.62 cr compared to Rs 91.73 cr for period ended Jun 2020, a rise of 186.3%
Company reported operating profit of Rs 30.34 cr for period ended Jun 2021, operating profit margin at 11.6 %.
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 0.91 compared to Rs 3.62 for previous quarter ended Mar 2021 and Rs 0.11 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1069.0 cr for period ended TTM vis-vis sales of Rs 898.0 cr for the period ended Mar 2021, a healthy growth of 16.0%. The 3 year sales cagr stood at 1.4%.
Operating margins expanded to 14.0% for period ended TTM vis-vis 13.0% for period ended Mar 2021, expansion of 100.0 bps.
Net Profit reported at Rs 147.0 cr for period ended TTM vis-vis sales of Rs 140.0 cr for the period ended Mar 2021, rising 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 79.0 cr for period ended Mar 2021 vis-vis Rs 37.0 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 improved its Return on Equity (RoE) metric. The RoE on Last Year basis was 38.0% compared to 27.0% over the last 3 Years. – The stock has given a return of 179% on a 1 Year basis vis-vis a return of 61% over the last 3 Years. – The compounded sales growth on a TTM bassis is 15% vis-vis a compounded sales growth of -1% over the last 3 Years. – The compounded profit growth on a TTM basis is 15% vis-vis a compounded profit growth of 39% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 4.27% vis-vis 4.47% for Mar 2021 – Public shareholding has fallen for the period ended Jun 2021. The Jun 2021 public holding stood at 41.01% vis-vis 45.14% for Mar 2021
Conclusion
– has reduced debt.
– is expected to give good quarter
– has delivered good profit growth of 63.79% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 27.14%
-Promoter holding has increased by 4.80% over last quarter. – Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of -11.54% over past five years.
-Tax rate seems low
– might be capitalizing the interest cost
-Promoters have pledged 81.97% of their holding.
-Earnings include an other income of Rs.77.49 Cr.
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 68.08 and is trading at 82.0, thus bullish price action wise.
