Mehabe score: 6 G Factor: 3 Piotski Score: 8 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 3 and Piotski score of 8.
Description
Gorani Industries is a well known company in the business line of kitchen and home appliances since 1996. Its main products are LPG stoves, induction cooker, gas geyser etc. carrying the brand name of Blowhot and Online. It does its business through a strong network of dealer and distributors all over central, south and north India.Site:531608Main Symbol:GORANIN
Stock trades at 23.2, above its 50dma 19.86. It also trades above its 200dma 17.54. The stock remains bullish on techicals
The 52 week high is at 26.00 and the 52week low is at 11.12
Price Chart
P/E Chart
Sales and Margin
Strengths
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Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
– has a low return on equity of 12.91% for last 3 years.
– might be capitalizing the interest cost
Competition
– The industry trades at a mean P/E of 50.8x. Whirlpool India trades at the industry’s max P/E of 92.21x. 531608 trades at a P/E of 14.3x
– Industry’s mean G-Factor is 3.1 while the mean Piotski score is 9.0. 531608 has a G-Factor of 3 and Piotski scoreof 8.
– Average 1 month return for industry is -0.6%. The max 1- month return was given by TTK Prestige: a return of 24.73 %
Quarterly Results
Sales for period ended Sep 2021 is Rs 8.48 cr compared to Rs 5.81 cr for period ended Sep 2020, a rise of 46.0%
Operating Profits reported at Rs 0.79 cr for period ended Sep 2021 vis-vis 0.64 for period ended Sep 2020 .
Operating Margins contracted -169.9 bps for period ended Sep 2021 vis-vis Sep 2020 .
The EPS for Sep 2021 was Rs 0.96 compared to Rs -0.12 for previous quarter ended Jun 2021 and Rs 0.86 for Sep 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 21.89 cr for period ended TTM vis-vis sales of Rs 18.4 cr for the period ended Mar 2021, a healthy growth of 15.9%. The 3 year sales cagr stood at 2.3%.
Operating margins expanded to 6.99% for period ended TTM vis-vis 6.79% for period ended Mar 2021, expansion of 20.0 bps.
Net Profit reported at Rs 0.79 cr for period ended TTM vis-vis sales of Rs 0.66 cr for the period ended Mar 2021, rising 16.5%.
Company recorded a healthy Net Profit CAGR of 12.2% over the last 3 years
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 had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 12.0% compared to 13.0% over the last 3 Years. – The stock has given a return of 89% on a 1 Year basis vis-vis a return of 2% over the last 3 Years. – The compounded sales growth on a TTM bassis is 22% vis-vis a compounded sales growth of -3% over the last 3 Years. – The compounded profit growth on a TTM basis is 36% vis-vis a compounded profit growth of -5% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Sep 2021 public holding stood at 40.0% vis-vis 40.0% for Jun 2021
Conclusion
– – Though the company is reporting repeated profits, it is not paying out dividend
– has a low return on equity of 12.91% for last 3 years.
– might be capitalizing the interest cost
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 19.86 and is trading at 23.2 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
