Mehabe score: 1 G Factor: 2 Piotski Score: 5 The stock has a rating SELL. 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 5.
Description
Shree Rama Multi-Tech Ltd is a leading packaging solutions provider and has wide customer base in local as well as foreign market. The company sells its products through its established network.#
Main Points
Product Portfolio
The company manufactures laminated tubes, speciality packaging products and laminates.#
Presently, Laminated tubes accounts for ~68% of revenues and laminates accounts for ~25% of revenues of the company.#Site:SHREERAMAMain Symbol:SHREERAMA
Stock trades at 13.7, below its 50dma 13.94. However it is trading above its 200dma 11.24. The stock remains weak in the short term due to near term bearish momentum. However overall bullish structure remains intact. Price action will further build up as it moves above its dma50, currently situated at 13.94.
The 52 week high is at 18.70 and the 52week low is at 5.55
Price Chart
P/E Chart
Sales and Margin
Strengths
– has a good return on equity (ROE) track record: 3 Years ROE 25.97%
Weakness
– Stock is trading at 3.08 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of 4.94% over past five years.
-Tax rate seems low
-Contingent liabilities of Rs.177.43 Cr.
– might be capitalizing the interest cost
Competition
– The industry trades at a mean P/E of 14.5x. Huhtamaki India trades at the industry’s max P/E of 38.78x. SHREERAMA trades at a P/E of 25.2x
– Industry’s mean G-Factor is 4.8 while the mean Piotski score is 9.0. SHREERAMA has a G-Factor of 2 and Piotski scoreof 5.
– Average 1 month return for industry is 7.0%. The max 1- month return was given by Cosmo Films: a return of 31.12 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 35.33 cr compared to Rs 26.58 cr for period ended Jun 2020, a rise of 32.9%
Operating Profits reported at Rs 1.79 cr for period ended Jun 2021 vis-vis 2.16 for period ended Jun 2020 .
Operating Margins contracted -306.0 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 0.01 compared to Rs 0.03 for previous quarter ended Mar 2021 and Rs 0.0 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 145.0 cr for period ended TTM vis-vis sales of Rs 136.0 cr for the period ended Mar 2021, a growth of 6.2%. The 3 year sales cagr stood at 7.4%.
Operating margins shrank to 8.0% for period ended TTM vis-vis 9.0% for period ended Mar 2021, contraction of 100.0 bps.
Net Profit reported at Rs 3.0 cr for period ended TTM vis-vis sales of Rs 3.0 cr for the period ended Mar 2021,
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 12.0% compared to 26.0% over the last 3 Years. – The stock has given a return of 136% on a 1 Year basis vis-vis a return of 18% over the last 3 Years. – The compounded sales growth on a TTM bassis is 19% vis-vis a compounded sales growth of 4% over the last 3 Years. – The compounded profit growth on a TTM basis is -75% vis-vis a compounded profit growth of 49% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Jun 2021 public holding stood at 57.49% vis-vis 57.49% for Mar 2021
Conclusion
– has a good return on equity (ROE) track record: 3 Years ROE 25.97% – Stock is trading at 3.08 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of 4.94% over past five years.
-Tax rate seems low
-Contingent liabilities of Rs.177.43 Cr.
– might be capitalizing the interest cost
Fundamentally, the stock remains weak. The business fundamentals are on shaky ground. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock reflects the poor fundamentals. The stock remains below its 50 DMA 13.94 and is trading at 13.7. It has shown near term lack of bullish momentum. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
