Mehabe score: 4 G Factor: 2 Piotski Score: 5 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 5.
Description
PrataapSnacks Limited (PSL) is an Indian snack food company engaged in manufacturing and marketing of multiple product variants like potato chips, extruded snacks and namkeen (traditional Indian snacks) under the Yellow Diamond brand and sweet snacks under the Rich Feast brand.
Main Points
Pan India presence – #The company has its presence in the 27 states and 3 Union Territories with a 14 Manufacturing plants (5 owned and 9 contract manufacturing plants). The company sells 11 Million packs of snacks every day.
– The Company’s products are classified into three broad categories: Salty snacks, sweet snacks and Avadh Portfolio. The company has launched three new products in the sweet snacks portfolio as sweet snacks offers a high profit margin the Company is also focused on increasing the share of revenue from the relatively higher margin sweet snacks business.
It has more than 100 Stock Keeping Units (SKUs) at strategic price points and pack sizes starting from Rs.5 to Rs.100.Site:DIAMONDYDMain Symbol:DIAMONDYD
Stock trades at 764.0, above its 50dma 662.52. It also trades above its 200dma 635.79. The stock remains bullish on techicals
The 52 week high is at 826.95 and the 52week low is at 484.65
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is almost debt free.
Weakness
– Stock is trading at 2.88 times its book value
-The company has delivered a poor sales growth of 9.11% over past five years.
-Tax rate seems low
– has a low return on equity of 6.10% for last 3 years.
-Dividend payout has been low at 6.18% of profits over last 3 years
Competition
– The industry trades at a mean P/E of 51.9x. Prataap Snacks trades at the industry’s max P/E of 126.58x. DIAMONDYD trades at a P/E of 127.0x
– Industry’s mean G-Factor is 3.9 while the mean Piotski score is 8.0. DIAMONDYD has a G-Factor of 2 and Piotski scoreof 5.
– Average 1 month return for industry is 9.3%. The max 1- month return was given by Tasty Bite Eat.: a return of 23.87 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 309.54 cr compared to Rs 314.17 cr for period ended Mar 2020, a fall of 1.5%
Operating Profits reported at Rs 13.93 cr for period ended Mar 2021 vis-vis 13.71 for period ended Mar 2020 .
Operating Margins expanded 13.6 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 3.04 compared to Rs 1.94 for previous quarter ended Dec 2020 and Rs 8.43 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1171.0 cr for period ended Mar 2021 vis-vis sales of Rs 1394.0 cr for the period ended Mar 2020, a fall of 19.0%. The 3 year sales cagr stood at 4.8%.
Operating margins shrank to 5.0% for period ended Mar 2021 vis-vis 7.0% for period ended Mar 2020, contraction of 200.0 bps.
Net Profit reported at Rs 14.0 cr for period ended Mar 2021 vis-vis sales of Rs 47.0 cr for the period ended Mar 2020, falling 235.7%.
Company reported a poor Net Profit CAGR of -31.7% 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 77.0 cr for period ended Mar 2021 vis-vis Rs 75.0 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 2.0% compared to 6.0% over the last 3 Years. – The stock has given a return of 39% on a 1 Year basis vis-vis a return of -12% over the last 3 Years. – The compounded sales growth on a TTM bassis is -16% vis-vis a compounded sales growth of 5% over the last 3 Years. – The compounded profit growth on a TTM basis is -70% vis-vis a compounded profit growth of -32% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 4.78% vis-vis 4.88% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 7.3% vis-vis 7.31% for Dec 2020
Conclusion
– has reduced debt.
– is almost debt free. – Stock is trading at 2.88 times its book value
-The company has delivered a poor sales growth of 9.11% over past five years.
-Tax rate seems low
– has a low return on equity of 6.10% for last 3 years.
-Dividend payout has been low at 6.18% of profits over last 3 years
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 662.52 and is trading at 764.0 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
