Mehabe score: 2 G Factor: 1 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 1 and Piotski score of 5.
Description
Donear Industries Ltd is engaged in manufacturing of fabrics having its own brand name “Donear” and also trading in garments under the brand name of “Dcot”.#
Main Points
Revenue Breakup
Polyester viscose fabrics account for 49% of revenues and cotton fabrics account for 34% of revenues.# The fabrics created by Donear consist of a range of popular blends like Polyester/ viscose, polyester/ cotton, poly/ wool, cotton/ linen, etc.#Site:DONEAR
Market Cap:
Rs 210 cr
Price:
40.4
Trading pe:
x
Book-value:
22.1/share
Div yield:
0.50 %
Earning yield:
1.42%
Face-value:
2.00/share
52week high:
47.00
52week low:
19.00
Technical Analysis
Stock trades at 40.4, above its 50dma 36.03. It also trades above its 200dma 32.49. The stock remains bullish on techicals
The 52 week high is at 47.00 and the 52week low is at 19.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of 1.47% over past five years.
– has a low return on equity of 12.30% for last 3 years.
-Dividend payout has been low at 7.97% of profits over last 3 years
Competition
– The industry trades at a mean P/E of 18.3x. Alok Industries trades at the industry’s max P/E of 413.91x. DONEAR trades at a P/E of x
– Industry’s mean G-Factor is 3.1 while the mean Piotski score is 9.0. DONEAR has a G-Factor of 1 and Piotski scoreof 5.
– Average 1 month return for industry is 17.8%. The max 1- month return was given by Siyaram Silk: a return of 31.65 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 149.27 cr compared to Rs 125.87 cr for period ended Mar 2020, a rise of 18.6%
Operating Profits reported at Rs 11.16 cr for period ended Mar 2021 vis-vis 8.49 for period ended Mar 2020 .
Operating Margins expanded 73.1 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 0.84 compared to Rs -0.28 for previous quarter ended Dec 2020 and Rs 0.35 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 358.0 cr for period ended Mar 2021 vis-vis sales of Rs 548.0 cr for the period ended Mar 2020, a fall of 53.1%. The 3 year sales cagr stood at -11.4%.
Operating margins shrank to 4.0% for period ended Mar 2021 vis-vis 9.0% for period ended Mar 2020, contraction of 500.0 bps.
Net Profit reported at Rs -6.0 cr for period ended Mar 2021 vis-vis sales of Rs 12.0 cr for the period ended Mar 2020, falling 0%.
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 10.0% compared to 12.0% over the last 3 Years. – The stock has given a return of 31% 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 -42% vis-vis a compounded sales growth of 3% over the last 3 Years. – The compounded profit growth on a TTM basis is -171% vis-vis a compounded profit growth of 12% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Mar 2021 public holding stood at 25.44% vis-vis 25.44% for Dec 2020
Conclusion
– has reduced debt. – has low interest coverage ratio.
-The company has delivered a poor sales growth of 1.47% over past five years.
– has a low return on equity of 12.30% for last 3 years.
-Dividend payout has been low at 7.97% 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 36.03 and is trading at 40.4 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
