Mehabe score: 5 G Factor: 2 Piotski Score: 4 The stock has a rating SELL. 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 4.
Description
GMM Pfaudler manufactures corrosion resistant glass-lined equipments #. It is a leading supplier of process equipments to the pharmaceutical and chemical industries #. Over the years GMMP has diversified its product portfolio to include Mixing Systems, Filtration & Drying Equipment, Engineered Systems and Heavy Engineering Equipments.
Main Points
Over 50% market share in India #
GMM Pfaudler (GMM) is the market leader of glass lined equipments in India with over 50% market share. GMM was a JV between Pfaudler Inc (50.4% stake) and the Ashok Patel family (24.6%) #. Pfaudler Inc is a 130-year old German company #.Site:GMMPFAUDLRMain Symbol:GMM
Stock trades at 4546.0, below its 50dma 4633.35. However it is trading above its 200dma 4247.78. The stock remains weak in the short term due to near term bearish momentum. However overall bullish structure remains intact. Price action will further build up as it moves above its dma50, currently situated at 4633.35.
The 52 week high is at 6913.85 and the 52week low is at 3316.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– is expected to give good quarter
– has delivered good profit growth of 29.74% CAGR over last 5 years
Weakness
– Stock is trading at 16.32 times its book value
-Tax rate seems low
– might be capitalizing the interest cost
-Debtor days have increased from 69.20 to 112.88 days.
-Promoter holding has decreased over last 3 years: -20.05%
Competition
– The industry trades at a mean P/E of 24.1x. GMM Pfaudler trades at the industry’s max P/E of 90.58x. GMMPFAUDLR trades at a P/E of 90.6x
– Industry’s mean G-Factor is 3.4 while the mean Piotski score is 8.0. GMMPFAUDLR has a G-Factor of 2 and Piotski scoreof 4.
– Average 1 month return for industry is 5.0%. The max 1- month return was given by ISGEC Heavy: a return of 27.88 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 458.62 cr compared to Rs 131.78 cr for period ended Mar 2020, a rise of 248.0%
Operating Profits reported at Rs 29.76 cr for period ended Mar 2021 vis-vis 22.47 for period ended Mar 2020 .
Operating Margins contracted -1056.2 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 2.84 compared to Rs 15.84 for previous quarter ended Dec 2020 and Rs 7.94 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1001.0 cr for period ended Mar 2021 vis-vis sales of Rs 591.0 cr for the period ended Mar 2020, a healthy growth of 41.0%. The 3 year sales cagr stood at 35.1%.
Operating margins shrank to 14.0% for period ended Mar 2021 vis-vis 19.0% for period ended Mar 2020, contraction of 500.0 bps.
Net Profit reported at Rs 73.0 cr for period ended Mar 2021 vis-vis sales of Rs 71.0 cr for the period ended Mar 2020, rising 2.7%.
Company recorded a healthy Net Profit CAGR of 19.3% 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 157.0 cr for period ended Mar 2021 vis-vis Rs 27.0 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 20.0% compared to 21.0% over the last 3 Years. – The stock has given a return of 14% on a 1 Year basis vis-vis a return of 77% over the last 3 Years. – The compounded sales growth on a TTM bassis is 69% vis-vis a compounded sales growth of 35% over the last 3 Years. – The compounded profit growth on a TTM basis is 2% vis-vis a compounded profit growth of 20% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 7.29% vis-vis 6.97% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 30.06% vis-vis 29.62% for Mar 2021
Conclusion
– is expected to give good quarter
– has delivered good profit growth of 29.74% CAGR over last 5 years – Stock is trading at 16.32 times its book value
-Tax rate seems low
– might be capitalizing the interest cost
-Debtor days have increased from 69.20 to 112.88 days.
-Promoter holding has decreased over last 3 years: -20.05%
Fundamentally, the stock remains weak. The business fundamentals are on shaky ground. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock reflects the poor fundamentals. The stock remains below its 50 DMA 4633.35 and is trading at 4546.0. It has shown near term lack of bullish momentum. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
