Mehabe score: 5 G Factor: 3 Piotski Score: 7 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 7.
Description
Ion Exchange (India) is engaged in a wide range of solutions across the water cycle from pre-treatment to process water treatment, waste water treatment, recycle, zero liquid discharge, sewage treatment, packaged drinking water, sea water desalination etc.(Source : 201903 Annual Report Page No: 63)
Main Points
Leader in Water Management Industry #
With 56 years of legacy the company has established a long standing presence in the Industry with more than 100,000 Installations worldwide #. IEL India started its journey as a flagship company for the Ion Exchange Group London but the Foreign holding has been reduced in stages and now is owned by the Indian promoters since 1985.Site:500214
Market Cap:
Rs 2,489 cr
Price:
1697.0
Trading pe:
24.5x
Book-value:
276/share
Div yield:
0.35 %
Earning yield:
7.35%
Face-value:
10.0/share
52week high:
1736.85
52week low:
599.00
Technical Analysis
Stock trades at 1697.0, above its 50dma 1388.95. It also trades above its 200dma 1113.59. The stock remains bullish on techicals
The 52 week high is at 1736.85 and the 52week low is at 599.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– has delivered good profit growth of 57.26% CAGR over last 5 years
Weakness
– Promoter holding is low: 27.01%
-Promoter holding has decreased over last 3 years: -17.03%
Competition
– The industry trades at a mean P/E of 24.9x. GMM Pfaudler trades at the industry’s max P/E of 95.99x. 500214 trades at a P/E of 24.5x
– Industry’s mean G-Factor is 2.8 while the mean Piotski score is 8.0. 500214 has a G-Factor of 3 and Piotski scoreof 7.
– Average 1 month return for industry is 17.2%. The max 1- month return was given by Praj Industries: a return of 48.99 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 445.0 cr compared to Rs 351.0 cr for period ended Mar 2020, a rise of 26.8%
Operating Profits reported at Rs 85.0 cr for period ended Mar 2021 vis-vis 39.0 for period ended Mar 2020 .
Operating Margins expanded 799.0 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 47.83 compared to Rs 19.87 for previous quarter ended Dec 2020 and Rs 19.16 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1450.0 cr for period ended Mar 2021 vis-vis sales of Rs 1480.0 cr for the period ended Mar 2020, a fall of 2.1%. The 3 year sales cagr stood at 11.5%.
Operating margins expanded to 14.0% for period ended Mar 2021 vis-vis 9.0% for period ended Mar 2020, expansion of 500.0 bps.
Net Profit reported at Rs 144.0 cr for period ended Mar 2021 vis-vis sales of Rs 93.0 cr for the period ended Mar 2020, rising 35.4%.
Company recorded a healthy Net Profit CAGR of 53.3% 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 stock has given a return of 141% on a 1 Year basis vis-vis a return of 59% over the last 3 Years. – The compounded sales growth on a TTM bassis is -13% vis-vis a compounded sales growth of 14% over the last 3 Years. – The compounded profit growth on a TTM basis is 1% vis-vis a compounded profit growth of 45% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 0.85% vis-vis 0.67% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 49.18% vis-vis 49.4% for Dec 2020
Conclusion
– has reduced debt.
– has delivered good profit growth of 57.26% CAGR over last 5 years – Promoter holding is low: 27.01%
-Promoter holding has decreased over last 3 years: -17.03%
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 1388.95 and is trading at 1697.0 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
