Investment Memo: 530431

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Our Rating: HOLD

Mehabe score: 5
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

Ador Fontech is a Frontrunner Organisation That Operates on the Philosophy of Partnering With Its Clients In Recommending and Implementing Value-Added Reclamation, Fusion, Surfacing, Spraying and Environmental Solutions.(Source : 201903 Annual Report Page No: 01)Site: 530431Main Symbol: ADORFO

Price Chart

Technical Analysis

• Stock trades at 78.0, above its 50dma 55.22. It also trades above its 200dma 43.76. The stock remains bullish on techicals
• The 52 week high is at 79.40 and the 52week low is at 29.10

Price Chart

P/E Chart

Sales and Margin

Strengths

– has reduced debt.
– is almost debt free.
– has been maintaining a healthy dividend payout of 67.92%

Weakness

– Stock is trading at 2.50 times its book value
-The company has delivered a poor sales growth of 0.99% over past five years.
-Promoter holding is low: 39.28%
– has a low return on equity of 9.60% for last 3 years.

Competition

– The industry trades at a mean P/E of 39.1x. Ador Welding trades at the industry’s max P/E of 84.54x. 530431 trades at a P/E of 27.2x
– Industry’s mean G-Factor is 3.9 while the mean Piotski score is 7.0. 530431 has a G-Factor of 6 and Piotski scoreof 7.
– Average 1 month return for industry is 21.6%. The max 1- month return was given by GEE: a return of 64.05 %

Quarterly Results

• Sales for period ended Mar 2021 is Rs 47.44 cr compared to Rs 34.17 cr for period ended Mar 2020, a rise of 38.8%
• Company reported operating profit of Rs 7.61 cr for period ended Mar 2021, operating profit margin at 16.0 %.
• Operating profit was negative for the same period last year thus company has improved its margins this year
• The EPS for Mar 2021 was Rs 1.33 compared to Rs 0.96 for previous quarter ended Dec 2020 and Rs -0.15 for Mar 2020

Profit & Loss Statement

Profit&Loss Comments

• Company reported sales of Rs 150.0 cr for period ended Mar 2021 vis-vis sales of Rs 177.0 cr for the period ended Mar 2020, a fall of 18.0%. The 3 year sales cagr stood at -0.4%.
• Operating margins expanded to 12.0% for period ended Mar 2021 vis-vis 8.0% for period ended Mar 2020, expansion of 400.0 bps.
• Net Profit reported at Rs 10.0 cr for period ended Mar 2021 vis-vis sales of Rs 9.0 cr for the period ended Mar 2020, rising 10.0%.
• Company recorded a healthy Net Profit CAGR of 12.6% 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 10.0% compared to 10.0% over the last 3 Years.
– The stock has given a return of 156% on a 1 Year basis vis-vis a return of 16% over the last 3 Years.
– The compounded sales growth on a TTM bassis is -16% vis-vis a compounded sales growth of -1% over the last 3 Years.
– The compounded profit growth on a TTM basis is 15% vis-vis a compounded profit growth of 15% over the last 3 Years.

Ratios

Shareholding Pattern

– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 4.86% vis-vis 4.87% for Mar 2021
– Public shareholding has remained largely constant. The Jun 2021 public holding stood at 53.56% vis-vis 53.37% for Mar 2021

Conclusion

– has reduced debt.
– is almost debt free.
– has been maintaining a healthy dividend payout of 67.92% – Stock is trading at 2.50 times its book value
-The company has delivered a poor sales growth of 0.99% over past five years.
-Promoter holding is low: 39.28%
– has a low return on equity of 9.60% 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 55.22 and is trading at 78.0, thus bullish price action wise.
• Thus, overall we retain a HOLD on the stock.

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