Mehabe score: 4 G Factor: 4 Piotski Score: 2 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 4 and Piotski score of 2.
Description
Dhanlaxmi Bank Ltd was Incorporated in 1927 in Thrissur, Kerala is a publicly held banking company engaged in providing a wide range of banking and financial services including retail banking, corporate banking, and treasury operations with a major concentration in Southern states. #
Main Points
Business Segments
Bank has 4 segments viz. Treasury operations, corporate wholesale banking Retail Banking & other banking business.#Site:DHANBANKMain Symbol:DHANBANK
Stock trades at 17.6, above its 50dma 16.49. It also trades above its 200dma 14.77. The stock remains bullish on techicals
The 52 week high is at 20.20 and the 52week low is at 11.50
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.54 times its book value
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -5.02% over past five years.
-Tax rate seems low
– has a low return on equity of 4.84% for last 3 years.
-Contingent liabilities of Rs.813.57 Cr.
Competition
– The industry trades at a mean P/E of 19.6x. Kotak Mah. Bank trades at the industry’s max P/E of 33.86x. DHANBANK trades at a P/E of 12.0x
– Industry’s mean G-Factor is 3.5 while the mean Piotski score is 6.0. DHANBANK has a G-Factor of 4 and Piotski scoreof 2.
– Average 1 month return for industry is -2.3%. The max 1- month return was given by Dhanlaxmi Bank: a return of 6.99 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 218.1 cr compared to Rs 236.65 cr for period ended Jun 2020, a fall of 7.8%
Operating Profits reported at Rs 93.63 cr for period ended Jun 2021 vis-vis 114.94 for period ended Jun 2020 .
Operating Margins contracted -564.0 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 0.27 compared to Rs 0.21 for previous quarter ended Mar 2021 and Rs 0.24 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 912.0 cr for period ended TTM vis-vis sales of Rs 931.0 cr for the period ended Mar 2021, a fall of 2.1%. The 3 year sales cagr stood at -2.1%.
Operating margins expanded to -77.0% for period ended TTM vis-vis -99.0% for period ended Mar 2021, expansion of 2200.0 bps.
Net Profit reported at Rs 38.0 cr for period ended TTM vis-vis sales of Rs 37.0 cr for the period ended Mar 2021, rising 2.6%.
Company recorded a healthy Net Profit CAGR of 46.8% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
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 5.0% compared to 5.0% over the last 3 Years. – The stock has given a return of 40% on a 1 Year basis vis-vis a return of 0% over the last 3 Years. – The compounded sales growth on a TTM bassis is -6% vis-vis a compounded sales growth of -3% over the last 3 Years. – The compounded profit growth on a TTM basis is -43% vis-vis a compounded profit growth of 52% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 11.43% vis-vis 11.43% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 88.5% vis-vis 88.22% for Mar 2021
Conclusion
– Stock is trading at 0.54 times its book value – Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -5.02% over past five years.
-Tax rate seems low
– has a low return on equity of 4.84% for last 3 years.
-Contingent liabilities of Rs.813.57 Cr.
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 16.49 and is trading at 17.6 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
