Mehabe score: 5 G Factor: 3 Piotski Score: 7 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 7.
Description
Elgi Equipments is engaged in the Business of Manufacturing of Air Compressors.Site:ELGIEQUIPMain Symbol:ELGIEQUIP
Stock trades at 212.0, above its 50dma 209.44. It also trades above its 200dma 175.85. The stock remains bullish on techicals
The 52 week high is at 244.00 and the 52week low is at 74.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has been maintaining a healthy dividend payout of 35.39%
Weakness
– Stock is trading at 7.73 times its book value
-The company has delivered a poor sales growth of 6.55% over past five years.
-Promoter holding is low: 31.91%
– has a low return on equity of 10.68% for last 3 years.
– might be capitalizing the interest cost
Competition
– The industry trades at a mean P/E of 41.6x. Elgi Equipments trades at the industry’s max P/E of 65.63x. ELGIEQUIP trades at a P/E of 65.6x
– Industry’s mean G-Factor is 3.2 while the mean Piotski score is 7.0. ELGIEQUIP has a G-Factor of 3 and Piotski scoreof 7.
– Average 1 month return for industry is 5.5%. The max 1- month return was given by Revathi Equipmnt: a return of 22.09 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 611.0 cr compared to Rs 455.0 cr for period ended Mar 2020, a rise of 34.3%
Operating Profits reported at Rs 79.0 cr for period ended Mar 2021 vis-vis 27.0 for period ended Mar 2020 .
Operating Margins expanded 699.6 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 1.37 compared to Rs 1.09 for previous quarter ended Dec 2020 and Rs 0.03 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1924.0 cr for period ended Mar 2021 vis-vis sales of Rs 1829.0 cr for the period ended Mar 2020, a growth of 4.9%. The 3 year sales cagr stood at 6.3%.
Operating margins expanded to 11.0% for period ended Mar 2021 vis-vis 8.0% for period ended Mar 2020, expansion of 300.0 bps.
Net Profit reported at Rs 102.0 cr for period ended Mar 2021 vis-vis sales of Rs 43.0 cr for the period ended Mar 2020, rising 57.8%.
Company recorded a Net Profit CAGR of 2.4% 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 240.0 cr for period ended Mar 2021 vis-vis Rs 35.0 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 had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 13.0% compared to 11.0% over the last 3 Years. – The stock has given a return of 177% on a 1 Year basis vis-vis a return of 15% over the last 3 Years. – The compounded sales growth on a TTM bassis is 5% vis-vis a compounded sales growth of 6% over the last 3 Years. – The compounded profit growth on a TTM basis is 142% vis-vis a compounded profit growth of 2% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 22.95% vis-vis 22.11% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 35.51% vis-vis 35.66% for Dec 2020
Conclusion
– has been maintaining a healthy dividend payout of 35.39% – Stock is trading at 7.73 times its book value
-The company has delivered a poor sales growth of 6.55% over past five years.
-Promoter holding is low: 31.91%
– has a low return on equity of 10.68% for last 3 years.
– might be capitalizing the interest cost
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 209.44 and is trading at 212.0 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
