Mehabe score: 2 G Factor: 3 Piotski Score: 5 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 3 and Piotski score of 5.
Description
Honeywell Automation India Limited (HAIL)was started in the year 1987 as a JV between Tata and Honeywell. It was known as Tata Honeywell Limited each holding 39.54% stake. Later in 2004 Honeywell Asia Pacific Inc. bought Tata’s stake and the name was changed to Honeywell Automation India Limited. #
Main Points
Leader in Integrated automation solutions
Honeywell Automation India Limited(HAIL) is a leader in providing integrated automation and software solutions besides process solutions and building solutions. A Fortune 500 company, it has a wide product portfolio in environmental and combustion controls, sensing controls etc. It also provides engineering services in the field of automation and control to global clients.Site:HONAUTMain Symbol:HONAUT
Stock trades at 41478.0, below its 50dma 42334.46. However it is trading above its 200dma 39798.46. 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 42334.46.
The 52 week high is at 49990.00 and the 52week low is at 27124.45
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
– has delivered good profit growth of 26.70% CAGR over last 5 years
Weakness
– Stock is trading at 14.22 times its book value
-The company has delivered a poor sales growth of 6.82% over past five years.
-Debtor days have increased from 89.55 to 114.66 days.
Competition
– The industry trades at a mean P/E of 37.5x. Amber Enterp. trades at the industry’s max P/E of 123.35x. HONAUT trades at a P/E of 79.7x
– Industry’s mean G-Factor is 3.4 while the mean Piotski score is 7.0. HONAUT has a G-Factor of 3 and Piotski scoreof 5.
– Average 1 month return for industry is 6.9%. The max 1- month return was given by Cosmo Ferrites: a return of 56.44 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 683.0 cr compared to Rs 736.0 cr for period ended Jun 2020, a fall of 7.2%
Operating Profits reported at Rs 117.0 cr for period ended Jun 2021 vis-vis 128.0 for period ended Jun 2020 .
Operating Margins contracted -26.1 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 103.52 compared to Rs 117.65 for previous quarter ended Mar 2021 and Rs 110.93 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 2990.0 cr for period ended TTM vis-vis sales of Rs 3043.0 cr for the period ended Mar 2021, a fall of 1.8%. The 3 year sales cagr stood at -2.0%.
Net Profit reported at Rs 453.0 cr for period ended TTM vis-vis sales of Rs 460.0 cr for the period ended Mar 2021, falling 1.5%.
Company recorded a Net Profit CAGR of 8.1% 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 364.0 cr for period ended Mar 2021 vis-vis Rs 330.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The stock has given a return of 52% on a 1 Year basis vis-vis a return of 26% over the last 3 Years. – The compounded sales growth on a TTM bassis is -8% vis-vis a compounded sales growth of 4% over the last 3 Years. – The compounded profit growth on a TTM basis is -6% vis-vis a compounded profit growth of 22% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 2.08% vis-vis 2.12% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 10.34% vis-vis 10.14% for Mar 2021
Conclusion
– is almost debt free.
– has delivered good profit growth of 26.70% CAGR over last 5 years – Stock is trading at 14.22 times its book value
-The company has delivered a poor sales growth of 6.82% over past five years.
-Debtor days have increased from 89.55 to 114.66 days.
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 42334.46 and is trading at 41478.0. 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
