Investment Memo: 506858

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Our Rating: HOLD

Mehabe score: 3
G Factor: 6
Piotski Score: 7
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 6 and Piotski score of 7.

Description

Gujarat Petrosynthese is primarily engaged in the business of plastic polymers and blends.Site: 506858

Technical Analysis

• Stock trades at 46.8, above its 50dma 36.61. It also trades above its 200dma 24.67. The stock remains bullish on techicals
• The 52 week high is at 46.85 and the 52week low is at 5.43

Price Chart

P/E Chart

Sales and Margin

Strengths

– is almost debt free.
-Stock is trading at 0.73 times its book value

Weakness

– Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -4.63% over past five years.
– has a low return on equity of -5.51% for last 3 years.

Competition

– The industry trades at a mean P/E of 24.8x. Responsive Ind trades at the industry’s max P/E of 184.33x. 506858 trades at a P/E of x
– Industry’s mean G-Factor is 4.8 while the mean Piotski score is 9.0. 506858 has a G-Factor of 6 and Piotski scoreof 7.
– Average 1 month return for industry is 16.5%. The max 1- month return was given by Jai Corp: a return of 40.32 %

Quarterly Results

• Sales for period ended Mar 2021 is Rs 6.42 cr compared to Rs 4.45 cr for period ended Mar 2020, a rise of 44.3%
• Company reported negative operating profit of Rs -0.36 cr for period ended Mar 2021. For same period last year, operating profit was -0.59
• The EPS for Mar 2021 was Rs -0.03 compared to Rs 9.52 for previous quarter ended Dec 2020 and Rs 3.37 for Mar 2020

Profit & Loss Statement

Profit&Loss Comments

• Company reported sales of Rs 19.34 cr for period ended Mar 2021 vis-vis sales of Rs 20.28 cr for the period ended Mar 2020, a fall of 4.9%. The 3 year sales cagr stood at 0.6%.
• Operating margins expanded to -6.36% for period ended Mar 2021 vis-vis -6.61% for period ended Mar 2020, expansion of 25.0 bps.
• Net Profit reported at Rs 5.46 cr for period ended Mar 2021 vis-vis sales of Rs 2.02 cr for the period ended Mar 2020, rising 0%.

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 improved its Return on Equity (RoE) metric. The RoE on Last Year basis was -1.0% compared to -6.0% over the last 3 Years.
– The stock has given a return of 722% on a 1 Year basis vis-vis a return of 24% over the last 3 Years.
– The compounded sales growth on a TTM bassis is -19% vis-vis a compounded sales growth of 5% over the last 3 Years.
– The compounded profit growth on a TTM basis is 91% vis-vis a compounded profit growth of 25% over the last 3 Years.

Ratios

Shareholding Pattern

– Public shareholding has remained largely constant. The Mar 2021 public holding stood at 35.17% vis-vis 35.17% for Dec 2020

Conclusion

– is almost debt free.
-Stock is trading at 0.73 times its book value – Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -4.63% over past five years.
– has a low return on equity of -5.51% for 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 36.61 and is trading at 46.8, thus bullish price action wise.
• Thus, overall we retain a HOLD on the stock.

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