Mehabe score: 3 G Factor: 5 Piotski Score: 3 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 5 and Piotski score of 3.
Description
Elgi Rubber Company is engaged in the business of manufacturing of rubber products, tread rubber, reclaim rubber, retreading and rebuilding of rubber tyres.Site:ELGIRUBCO
Market Cap:
Rs 184 cr
Price:
36.8
Trading pe:
x
Book-value:
37.0/share
Div yield:
0.44 %
Earning yield:
2.42%
Face-value:
1.00/share
52week high:
41.50
52week low:
14.10
Technical Analysis
Stock trades at 36.8, above its 50dma 32.79. It also trades above its 200dma 26.13. The stock remains bullish on techicals
The 52 week high is at 41.50 and the 52week low is at 14.10
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.99 times its book value
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -3.56% over past five years.
– has a low return on equity of -7.38% for last 3 years.
– might be capitalizing the interest cost
-Earnings include an other income of Rs.18.13 Cr.
Competition
– The industry trades at a mean P/E of 19.1x. GRP trades at the industry’s max P/E of 82.69x. ELGIRUBCO trades at a P/E of x
– Industry’s mean G-Factor is 4.6 while the mean Piotski score is 7.0. ELGIRUBCO has a G-Factor of 5 and Piotski scoreof 3.
– Average 1 month return for industry is 5.7%. The max 1- month return was given by GRP: a return of 10.12 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 92.25 cr compared to Rs 92.94 cr for period ended Mar 2020, a fall of 0.7%
Company reported operating profit of Rs 2.75 cr for period ended Mar 2021, operating profit margin at 3.0 %.
Operating profit was negative for the same period last year thus company has improved its margins this year
The EPS for Mar 2021 was Rs -0.17 compared to Rs 2.32 for previous quarter ended Dec 2020 and Rs -1.4 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 343.0 cr for period ended Mar 2021 vis-vis sales of Rs 367.0 cr for the period ended Mar 2020, a fall of 7.0%. The 3 year sales cagr stood at -3.1%.
Operating margins expanded to 6.0% for period ended Mar 2021 vis-vis -1.0% for period ended Mar 2020, expansion of 700.0 bps.
Net Profit reported at Rs 1.0 cr for period ended Mar 2021 vis-vis sales of Rs -15.0 cr for the period ended Mar 2020, rising 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 worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -12.0% compared to -7.0% over the last 3 Years. – The stock has given a return of 142% 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 -11% vis-vis a compounded sales growth of -1% over the last 3 Years. – The compounded profit growth on a TTM basis is 47% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Conclusion
– Stock is trading at 0.99 times its book value – has low interest coverage ratio.
-The company has delivered a poor sales growth of -3.56% over past five years.
– has a low return on equity of -7.38% for last 3 years.
– might be capitalizing the interest cost
-Earnings include an other income of Rs.18.13 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 32.79 and is trading at 36.8 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
