Mehabe score: 4 G Factor: 4 Piotski Score: 5 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 5.
Description
Kennametal India Ltd was incorporated in 1938, it is a 75% subsidiary of Kennametal Inc. It manufactures carbide tools and special-purpose machines for automotive, defense, railways, infrastructure and General engineering segments. The manufacturing unit is in Bengaluru.##
Main Points
Business segments
Machining solutions (21%): Machining solutions segment manufactures and sells customised capital intensive machines. Group specialises in providing end to end solutions i.e. from design to manufacture and after sales service. The sales comprise of machines, xtures, sale of spares and after sales serviceSite:KENNAMETMain Symbol:KENNAMET
Stock trades at 1230.0, above its 50dma 1226.39. It also trades above its 200dma 1079.33. The stock remains bullish on techicals
The 52 week high is at 1440.00 and the 52week low is at 696.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
– is expected to give good quarter
-Debtor days have improved from 46.24 to 36.12 days.
Weakness
– The company has delivered a poor sales growth of 7.31% over past five years.
– has a low return on equity of 12.11% for last 3 years.
-Dividend payout has been low at 1.70% of profits over last 3 years
Competition
– The industry trades at a mean P/E of 20.6x. GMM Pfaudler trades at the industry’s max P/E of 110.83x. KENNAMET trades at a P/E of 40.2x
– Industry’s mean G-Factor is 3.4 while the mean Piotski score is 8.0. KENNAMET has a G-Factor of 4 and Piotski scoreof 5.
– Average 1 month return for industry is -3.2%. The max 1- month return was given by Hind.Aeronautics: a return of 5.01 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 212.0 cr compared to Rs 87.0 cr for period ended Jun 2020, a rise of 143.7%
Company reported operating profit of Rs 37.0 cr for period ended Jun 2021, operating profit margin at 17.5 %.
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 9.87 compared to Rs 9.55 for previous quarter ended Mar 2021 and Rs -3.87 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 811.0 cr for period ended Jun 2021 vis-vis sales of Rs 641.0 cr for the period ended Jun 2020, a healthy growth of 21.0%. The 3 year sales cagr stood at 0.8%.
Operating margins expanded to 15.0% for period ended Jun 2021 vis-vis 10.0% for period ended Jun 2020, expansion of 500.0 bps.
Net Profit reported at Rs 67.0 cr for period ended Jun 2021 vis-vis sales of Rs 32.0 cr for the period ended Jun 2020, rising 52.2%.
Company recorded a Net Profit CAGR of 8.8% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
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 12.0% compared to 12.0% over the last 3 Years. – The stock has given a return of 49% on a 1 Year basis vis-vis a return of 13% over the last 3 Years. – The compounded sales growth on a TTM bassis is 27% vis-vis a compounded sales growth of 1% over the last 3 Years. – The compounded profit growth on a TTM basis is 87% vis-vis a compounded profit growth of 5% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 0.7% vis-vis 0.78% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 11.41% vis-vis 11.31% for Mar 2021
Conclusion
– is almost debt free.
– is expected to give good quarter
-Debtor days have improved from 46.24 to 36.12 days. – The company has delivered a poor sales growth of 7.31% over past five years.
– has a low return on equity of 12.11% for last 3 years.
-Dividend payout has been low at 1.70% of profits over last 3 years
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 1226.39 and is trading at 1230.0, thus bullish price action wise.
