Mehabe score: 2 G Factor: 3 Piotski Score: 6 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 3 and Piotski score of 6.
Description
Merck Limited is engaged in manufacturing and marketing of pharmaceuticals, bulk drugs, fine chemicals and pigments.Site:PGHLMain Symbol:PGHL
Stock trades at 5483.0, below its 50dma 5584.0 and below its 200dma 5805.18. The stock remains bearish on technicals
The 52 week high is at 7500.00 and the 52week low is at 4674.30
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
– has delivered good profit growth of 42.74% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 38.30%
– has been maintaining a healthy dividend payout of 87.96%
-Debtor days have improved from 39.41 to 25.65 days.
Weakness
– Stock is trading at 12.93 times its book value
-The company has delivered a poor sales growth of 9.34% over past five years.
Competition
– The industry trades at a mean P/E of 60.3x. Astrazeneca Phar trades at the industry’s max P/E of 90.56x. PGHL trades at a P/E of 47.5x
– Industry’s mean G-Factor is 3.4 while the mean Piotski score is 8.0. PGHL has a G-Factor of 3 and Piotski scoreof 6.
– Average 1 month return for industry is -3.9%. The max 1- month return was given by Sanofi India: a return of 8.99 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 285.0 cr compared to Rs 201.0 cr for period ended Jun 2020, a rise of 41.8%
Operating Profits reported at Rs 48.0 cr for period ended Jun 2021 vis-vis 53.0 for period ended Jun 2020 .
Operating Margins contracted -952.6 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 20.42 compared to Rs 9.5 for previous quarter ended Mar 2021 and Rs 29.43 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1009.0 cr for period ended Jun 2021 vis-vis sales of Rs 1356.0 cr for the period ended Jun 2020, a fall of 34.4%. The 3 year sales cagr stood at 13.1%.
Net Profit reported at Rs 177.0 cr for period ended Jun 2021 vis-vis sales of Rs 254.0 cr for the period ended Jun 2020, falling 43.5%.
Company recorded a healthy Net Profit CAGR of 23.5% 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 worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 21.0% compared to 38.0% over the last 3 Years. – The stock has given a return of 9% on a 1 Year basis vis-vis a return of 20% over the last 3 Years. – The compounded sales growth on a TTM bassis is 0% vis-vis a compounded sales growth of 11% over the last 3 Years. – The compounded profit growth on a TTM basis is 17% vis-vis a compounded profit growth of 48% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 6.45% vis-vis 6.71% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 29.93% vis-vis 30.0% for Mar 2021
Conclusion
– is almost debt free.
– has delivered good profit growth of 42.74% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 38.30%
– has been maintaining a healthy dividend payout of 87.96%
-Debtor days have improved from 39.41 to 25.65 days. – Stock is trading at 12.93 times its book value
-The company has delivered a poor sales growth of 9.34% over past five years.
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 5584.0 and is trading at 5483.0. 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
