Mehabe score: 6 G Factor: 2 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 2 and Piotski score of 6.
Description
Damodar Industries Limited is engaged activities of manufacturing, processing and merchant trading of Cotton yarn & Fancy Yarn.
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Main Points
Geographical Revenue Breakup
The company sells its manufactured yarns to domestic and international customers. It earns ~60% of revenues from exporting yarns.#Site:DAMODARINDMain Symbol:DAMOINDUS
Stock trades at 50.0, above its 50dma 44.09. It also trades above its 200dma 34.28. The stock remains bullish on techicals
The 52 week high is at 57.55 and the 52week low is at 20.10
Price Chart
P/E Chart
Sales and Margin
Strengths
– is expected to give good quarter
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -1.78% over past five years.
– has a low return on equity of -1.54% for last 3 years.
-Promoters have pledged 30.02% of their holding.
Competition
– The industry trades at a mean P/E of 17.0x. Banswara Syntex trades at the industry’s max P/E of 33.18x. DAMODARIND trades at a P/E of 23.3x
– Industry’s mean G-Factor is 4.9 while the mean Piotski score is 8.0. DAMODARIND has a G-Factor of 2 and Piotski scoreof 6.
– Average 1 month return for industry is 40.0%. The max 1- month return was given by Sportking India: a return of 126.14 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 202.66 cr compared to Rs 54.84 cr for period ended Jun 2020, a rise of 269.5%
Operating Profits reported at Rs 16.65 cr for period ended Jun 2021 vis-vis 0.21 for period ended Jun 2020 .
Operating Margins expanded 783.3 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 1.07 compared to Rs 3.52 for previous quarter ended Mar 2021 and Rs -3.86 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 715.0 cr for period ended TTM vis-vis sales of Rs 568.0 cr for the period ended Mar 2021, a healthy growth of 20.6%. The 3 year sales cagr stood at -2.5%.
Operating margins expanded to 8.0% for period ended TTM vis-vis 7.0% for period ended Mar 2021, expansion of 100.0 bps.
Net Profit reported at Rs 5.0 cr for period ended TTM vis-vis sales of Rs -6.0 cr for the period ended Mar 2021, rising 220.0%.
Company reported a poor Net Profit CAGR of -14.5% 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 47.0 cr for period ended Mar 2021 vis-vis Rs 26.0 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 worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -6.0% compared to -2.0% over the last 3 Years. – The stock has given a return of 104% on a 1 Year basis vis-vis a return of -1% over the last 3 Years. – The compounded sales growth on a TTM bassis is 13% vis-vis a compounded sales growth of -4% over the last 3 Years. – The compounded profit growth on a TTM basis is 138% 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 29.36% vis-vis 29.36% for Mar 2021
Conclusion
– is expected to give good quarter – has low interest coverage ratio.
-The company has delivered a poor sales growth of -1.78% over past five years.
– has a low return on equity of -1.54% for last 3 years.
-Promoters have pledged 30.02% of their holding.
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 44.09 and is trading at 50.0 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
