Mehabe score: 4 G Factor: 5 Piotski Score: 4 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 4.
Description
Greaves Cotton is engaged in manufacturing of engines, engine applications and trading of power tillers, spares related to engines, electric vehicles and infrastructure equipment etc.(Source : 202003 Annual Report Page No:98)
Main Points
Leadership Position in diesel engine segment:
GCL has a market share of around 60%-65% in the 3W diesel engine segment. GCL supplies engines to around 30 original equipment manufacturers (OEMs) in India, such as Piaggio Vehicle Limited, Mahindra & Mahindra Limited, Atul Auto etc.Site:GREAVESCOTMain Symbol:GREAVESCOT
Stock trades at 161.0, above its 50dma 153.9. It also trades above its 200dma 124.0. The stock remains bullish on techicals
The 52 week high is at 184.40 and the 52week low is at 66.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is almost debt free.
Weakness
– The company has delivered a poor sales growth of -1.47% over past five years.
– has a low return on equity of 10.98% for last 3 years.
-‘s cost of borrowing seems high
Competition
– The industry trades at a mean P/E of 24.8x. Cummins India trades at the industry’s max P/E of 36.36x. GREAVESCOT trades at a P/E of x
– Industry’s mean G-Factor is 4.8 while the mean Piotski score is 7.0. GREAVESCOT has a G-Factor of 5 and Piotski scoreof 4.
– Average 1 month return for industry is 9.4%. The max 1- month return was given by G G Engineering: a return of 22.82 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 520.0 cr compared to Rs 386.0 cr for period ended Mar 2020, a rise of 34.7%
Operating Profits reported at Rs 42.0 cr for period ended Mar 2021 vis-vis 24.0 for period ended Mar 2020 .
Operating Margins expanded 185.9 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 0.59 compared to Rs 0.9 for previous quarter ended Dec 2020 and Rs 0.02 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1500.0 cr for period ended Mar 2021 vis-vis sales of Rs 1911.0 cr for the period ended Mar 2020, a fall of 27.4%. The 3 year sales cagr stood at -5.8%.
Operating margins shrank to 5.0% for period ended Mar 2021 vis-vis 11.0% for period ended Mar 2020, contraction of 600.0 bps.
Net Profit reported at Rs -19.0 cr for period ended Mar 2021 vis-vis sales of Rs 129.0 cr for the period ended Mar 2020, falling 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 147.0 cr for period ended Mar 2021 vis-vis Rs 102.0 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 -0.0% compared to 11.0% over the last 3 Years. – The stock has given a return of 88% on a 1 Year basis vis-vis a return of 4% over the last 3 Years. – The compounded sales growth on a TTM bassis is -21% vis-vis a compounded sales growth of -6% over the last 3 Years. – The compounded profit growth on a TTM basis is -103% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 4.54% vis-vis 4.94% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 28.1% vis-vis 26.4% for Mar 2021
Conclusion
– has reduced debt.
– is almost debt free. – The company has delivered a poor sales growth of -1.47% over past five years.
– has a low return on equity of 10.98% for last 3 years.
-‘s cost of borrowing seems high
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 153.9 and is trading at 161.0 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
