Mehabe score: 3 G Factor: 5 Piotski Score: 3 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 5 and Piotski score of 3.
Description
Valson Industries is engaged in Texturising, Twisting of Polyester yarns and Dyeing of Polyester, Cotton and other fancy Yarns.(Source : 202003 Annual Report Page No: 70)Site:530459Main Symbol:VALSONQ
Stock trades at 22.4, above its 50dma 19.95. It also trades above its 200dma 17.9. The stock remains bullish on techicals
The 52 week high is at 25.43 and the 52week low is at 10.46
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.64 times its book value
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -6.79% over past five years.
– has a low return on equity of -2.28% for last 3 years.
-Debtor days have increased from 33.45 to 41.73 days.
Competition
– The industry trades at a mean P/E of 16.4x. Alok Industries trades at the industry’s max P/E of 21.96x. 530459 trades at a P/E of x
– Industry’s mean G-Factor is 3.8 while the mean Piotski score is 6.0. 530459 has a G-Factor of 5 and Piotski scoreof 3.
– Average 1 month return for industry is 10.9%. The max 1- month return was given by Vishal Fabrics: a return of 43.63 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 25.73 cr compared to Rs 21.11 cr for period ended Mar 2020, a rise of 21.9%
Operating Profits reported at Rs 0.95 cr for period ended Mar 2021 vis-vis 0.73 for period ended Mar 2020 .
Operating Margins expanded 23.4 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 0.14 compared to Rs -0.74 for previous quarter ended Dec 2020 and Rs 0.22 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 63.68 cr for period ended Mar 2021 vis-vis sales of Rs 91.55 cr for the period ended Mar 2020, a fall of 43.8%. The 3 year sales cagr stood at -13.5%.
Operating margins shrank to -1.49% for period ended Mar 2021 vis-vis 4.63% for period ended Mar 2020, contraction of 612.0 bps.
Net Profit reported at Rs -5.0 cr for period ended Mar 2021 vis-vis sales of Rs 0.71 cr for the period ended Mar 2020, falling 0%.
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 worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -17.0% compared to -2.0% over the last 3 Years. – The stock has given a return of 41% on a 1 Year basis vis-vis a return of -14% over the last 3 Years. – The compounded sales growth on a TTM bassis is -30% vis-vis a compounded sales growth of -13% over the last 3 Years. – The compounded profit growth on a TTM basis is -804% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Jun 2021 public holding stood at 32.25% vis-vis 32.25% for Mar 2021
Conclusion
– Stock is trading at 0.64 times its book value – has low interest coverage ratio.
-The company has delivered a poor sales growth of -6.79% over past five years.
– has a low return on equity of -2.28% for last 3 years.
-Debtor days have increased from 33.45 to 41.73 days.
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 19.95 and is trading at 22.4 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
