Mehabe score: 4 G Factor: 3 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 3 and Piotski score of 4.
Description
Business Review
Indostar Capital Finance Ltd. is a non-banking finance company (NBFC) registered with the Reserve Bank of India as a non-deposit-taking company. It is engaged in Corporate lending & retail lending which includes commercial vehicle finance, SME finance & housing loan finance.
It commenced operations in 2011 as an NBFC focussed on financing the corporate sector. In 2016, Company diversified its business from a corporate lender to a retail-focused NBFC.
It has 217 branches across 18 states in Dec 2020. It expanded from 129 branches (Dec 18) with the addition of 58 branches for the commercial vehicle finance segment.
Main Points
AUM break up
Total AUM is 88645 million as on Dec 20 increased by 14% from Dec 18 but decreased by 13% from Dec 19 due to COVID-19 # #Site:INDOSTAR
Market Cap:
Rs 4,754 cr
Price:
384.0
Trading pe:
x
Book-value:
217/share
Div yield:
0.26 %
Earning yield:
2.70%
Face-value:
10.0/share
52week high:
423.80
52week low:
237.60
Technical Analysis
Stock trades at 384.0, above its 50dma 337.96. It also trades above its 200dma 314.88. The stock remains bullish on techicals
The 52 week high is at 423.80 and the 52week low is at 237.60
Price Chart
P/E Chart
Sales and Margin
Strengths
–
Weakness
– has low interest coverage ratio.
– has a low return on equity of -3.69% for last 3 years.
Competition
– The industry trades at a mean P/E of 19.7x. SBI Cards trades at the industry’s max P/E of 100.52x. INDOSTAR trades at a P/E of x
– Industry’s mean G-Factor is 4.5 while the mean Piotski score is 7.0. INDOSTAR has a G-Factor of 3 and Piotski scoreof 4.
– Average 1 month return for industry is 8.1%. The max 1- month return was given by Indostar Capital: a return of 26.88 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 278.0 cr compared to Rs 332.0 cr for period ended Mar 2020, a fall of 16.3%
Company reported negative operating profit of Rs -179.0 cr for period ended Mar 2021. For same period last year, operating profit was -361.0
The EPS for Mar 2021 was Rs -25.63 compared to Rs 1.96 for previous quarter ended Dec 2020 and Rs -45.58 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1280.0 cr for period ended Mar 2021 vis-vis sales of Rs 1528.0 cr for the period ended Mar 2020, a fall of 19.4%. The 3 year sales cagr stood at 17.5%.
Operating margins expanded to 40.0% for period ended Mar 2021 vis-vis 25.0% for period ended Mar 2020, expansion of 1500.0 bps.
Net Profit reported at Rs -214.0 cr for period ended Mar 2021 vis-vis sales of Rs -325.0 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 -8.0% compared to -4.0% over the last 3 Years. – The stock has given a return of 35% on a 1 Year basis vis-vis a return of -12% over the last 3 Years. – The compounded sales growth on a TTM bassis is -16% vis-vis a compounded sales growth of 18% over the last 3 Years. – The compounded profit growth on a TTM basis is 34% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 0.05% vis-vis 0.02% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 3.95% vis-vis 3.81% for Dec 2020
Conclusion
– – has low interest coverage ratio.
– has a low return on equity of -3.69% for last 3 years.
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 337.96 and is trading at 384.0 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
