Mehabe score: 4 G Factor: 3 Piotski Score: 6 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 6.
Description
Indag Rubber is engaged in the manufacturing and selling of Precured Tread Rubber and allied products.(Source : 201903 Annual Report Page No: 74)
Main Points
Terminated Joint Venture
Indag Rubber Limited was incorporated in July 1978 as a joint venture between Khemka group and Bandag Incorporated, one of the biggest players in the US retreading industry#. In 2006, the joint venture was terminated with Bandag’s 38.3% shareholding taken over by the Khemka GroupSite:509162Main Symbol:INDAG
Stock trades at 99.0, above its 50dma 98.73. It also trades above its 200dma 91.21. The stock remains bullish on techicals
The 52 week high is at 117.30 and the 52week low is at 61.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
– has been maintaining a healthy dividend payout of 111.77%
Weakness
– The company has delivered a poor sales growth of -7.65% over past five years.
– has a low return on equity of 6.35% for last 3 years.
Competition
– The industry trades at a mean P/E of 18.6x. Elgi Rubber Co trades at the industry’s max P/E of 301.34x. 509162 trades at a P/E of 21.3x
– Industry’s mean G-Factor is 4.3 while the mean Piotski score is 8.0. 509162 has a G-Factor of 3 and Piotski scoreof 6.
– Average 1 month return for industry is 8.5%. The max 1- month return was given by Pix Transmission: a return of 24.27 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 31.3 cr compared to Rs 25.63 cr for period ended Jun 2020, a rise of 22.1%
Company reported negative operating profit of Rs -0.73 cr for period ended Jun 2021. For same period last year, operating profit was -0.49
The EPS for Jun 2021 was Rs -0.3 compared to Rs 0.62 for previous quarter ended Mar 2021 and Rs -0.17 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 176.0 cr for period ended TTM vis-vis sales of Rs 170.0 cr for the period ended Mar 2021, a growth of 3.4%. The 3 year sales cagr stood at 1.4%.
Operating margins shrank to 9.0% for period ended TTM vis-vis 10.0% for period ended Mar 2021, contraction of 100.0 bps.
Net Profit reported at Rs 2.0 cr for period ended TTM vis-vis sales of Rs 3.0 cr for the period ended Mar 2021, falling 50.0%.
Company reported a poor Net Profit CAGR of -43.3% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 13.0 cr for period ended Mar 2021 vis-vis Rs 8.0 cr for period ended Mar 2020
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 6.0% compared to 6.0% over the last 3 Years. – The stock has given a return of 57% on a 1 Year basis vis-vis a return of -13% over the last 3 Years. – The compounded sales growth on a TTM bassis is -9% vis-vis a compounded sales growth of 1% over the last 3 Years. – The compounded profit growth on a TTM basis is -8% vis-vis a compounded profit growth of -8% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 2.48% vis-vis 2.48% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 23.6% vis-vis 23.6% for Mar 2021
Conclusion
– is almost debt free.
– has been maintaining a healthy dividend payout of 111.77% – The company has delivered a poor sales growth of -7.65% over past five years.
– has a low return on equity of 6.35% for last 3 years.
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 98.73 and is trading at 99.0 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
