Mehabe score: 6 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
Aarti Surfactants manufactures surfactants and specialty products, serving Home & Personal Care, Industrial Applications, Agro and Oil industries in India and overseas. Aarti Surfactants Limited has been a result of the demerger of the Home and Personal Care division of Aarti Industries Limited. The Company manufactures over 30 innovative and eco‐friendly surfactants and also creates custom surfactants. It got listed in 2020. They have Manufacturing plants located at Pithampur (Madhya Pradesh) and Silvassa.
Main Points
Products
Co. manufactures Surfactants. These are surface-active agents that reduce the surface tension of a liquid and increase its wetting properties.#
The company’s other product portfolio includes rheology modifiers, pearlizing agents, UV filters, syndet and soap bases, and active ingredients, as well as conditioning agents, blends, proteins, and quats.Site:AARTISURFMain Symbol:AARTISURF
Stock trades at 1416.0, above its 50dma 1377.43. It also trades above its 200dma 1107.98. The stock remains bullish on techicals
The 52 week high is at 1730.00 and the 52week low is at 222.10
Price Chart
P/E Chart
Sales and Margin
Strengths
–
Weakness
– Stock is trading at 8.10 times its book value
-Tax rate seems low
-Debtor days have increased from 31.36 to 42.65 days.
Competition
– The industry trades at a mean P/E of 31.0x. Pidilite Inds. trades at the industry’s max P/E of 101.53x. AARTISURF trades at a P/E of 49.6x
– Industry’s mean G-Factor is 3.6 while the mean Piotski score is 8.0. AARTISURF has a G-Factor of 3 and Piotski scoreof 6.
– Average 1 month return for industry is 7.8%. The max 1- month return was given by Navin Fluo.Intl.: a return of 15.99 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 126.17 cr compared to Rs 89.13 cr for period ended Mar 2020, a rise of 41.6%
Operating Profits reported at Rs 11.88 cr for period ended Mar 2021 vis-vis 8.51 for period ended Mar 2020 .
Operating Margins contracted -13.2 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 7.5 compared to Rs 6.32 for previous quarter ended Dec 2020 and Rs 4.39 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 466.0 cr for period ended Mar 2021 vis-vis sales of Rs 326.0 cr for the period ended Mar 2020, a healthy growth of 30.0%.
Operating margins expanded to 10.0% for period ended Mar 2021 vis-vis 7.0% for period ended Mar 2020, expansion of 300.0 bps.
Net Profit reported at Rs 22.0 cr for period ended Mar 2021 vis-vis sales of Rs 2.0 cr for the period ended Mar 2020, rising 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 36.0 cr for period ended Mar 2021 vis-vis Rs 18.0 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 improved its Return on Equity (RoE) metric. The RoE on Last Year basis was 16.0% compared to 0% over the last 3 Years. – The stock has given a return of 245% on a 1 Year basis vis-vis a return of % over the last 3 Years. – The compounded sales growth on a TTM bassis is 43% vis-vis a compounded sales growth of % over the last 3 Years. – The compounded profit growth on a TTM basis is 935% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 1.61% vis-vis 1.59% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 49.16% vis-vis 49.1% for Dec 2020
Conclusion
– – Stock is trading at 8.10 times its book value
-Tax rate seems low
-Debtor days have increased from 31.36 to 42.65 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 1377.43 and is trading at 1416.0 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
