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Our Rating: OBSERVE & HOLD
Mehabe score: 6 G Factor: 3 Piotski Score: 5 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 5.
Description
Modern Steels is engaged in manufacturing of Steel Rolled products.Site:513303Main Symbol:MDRNSTL
Stock trades at 7.94, above its 50dma 4.81. It also trades above its 200dma 4.52. The stock remains bullish on techicals
The 52 week high is at 7.94 and the 52week low is at 2.72
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is expected to give good quarter
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -20.42% over past five years.
-Promoters have pledged 100.00% of their holding.
Competition
– The industry trades at a mean P/E of 14.0x. Apollo Tricoat trades at the industry’s max P/E of 35.01x. 513303 trades at a P/E of x
– Industry’s mean G-Factor is 5.2 while the mean Piotski score is 9.0. 513303 has a G-Factor of 3 and Piotski scoreof 5.
– Average 1 month return for industry is 15.1%. The max 1- month return was given by Modern Steels: a return of 94.61 %
Quarterly Results
Sales for period ended Sep 2021 is Rs 34.02 cr compared to Rs 20.19 cr for period ended Sep 2020, a rise of 68.5%
Company reported negative operating profit of Rs -0.15 cr for period ended Sep 2021. For same period last year, operating profit was -7.45
The EPS for Sep 2021 was Rs -1.0 compared to Rs -1.04 for previous quarter ended Jun 2021 and Rs -6.24 for Sep 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 126.0 cr for period ended TTM vis-vis sales of Rs 84.0 cr for the period ended Mar 2021, a healthy growth of 33.3%. The 3 year sales cagr stood at -26.9%.
Operating margins expanded to -7.0% for period ended TTM vis-vis -25.0% for period ended Mar 2021, expansion of 1800.0 bps.
Net Profit reported at Rs 51.0 cr for period ended TTM vis-vis sales of Rs -22.0 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 133.0 cr for period ended Mar 2021 vis-vis Rs 1.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The stock has given a return of 108% on a 1 Year basis vis-vis a return of -11% over the last 3 Years. – The compounded sales growth on a TTM bassis is 31% vis-vis a compounded sales growth of -39% over the last 3 Years. – The compounded profit growth on a TTM basis is 83% vis-vis a compounded profit growth of 8% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Sep 2021 public holding stood at 34.42% vis-vis 34.42% for Jun 2021
Conclusion
– has reduced debt.
– is expected to give good quarter – has low interest coverage ratio.
-The company has delivered a poor sales growth of -20.42% over past five years.
-Promoters have pledged 100.00% of their holding.
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 4.81 and is trading at 7.94 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
