Mehabe score: 6 G Factor: 4 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 4 and Piotski score of 4.
Description
Kuantum Papers is a primarily consists of manufacture and sales of paper, mainly in the domestic markets.Site:KUANTUMMain Symbol:KUANTUM
Stock trades at 79.2, above its 50dma 78.19. It also trades above its 200dma 69.27. The stock remains bullish on techicals
The 52 week high is at 103.95 and the 52week low is at 37.10
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.82 times its book value
– is expected to give good quarter
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -5.14% over past five years.
– has a low return on equity of 5.96% for last 3 years.
– might be capitalizing the interest cost
-Promoters have pledged 78.90% of their holding.
Competition
– The industry trades at a mean P/E of 13.7x. Century Textiles trades at the industry’s max P/E of 98.46x. KUANTUM trades at a P/E of 104.0x
– Industry’s mean G-Factor is 4.8 while the mean Piotski score is 5.0. KUANTUM has a G-Factor of 4 and Piotski scoreof 4.
– Average 1 month return for industry is -1.5%. The max 1- month return was given by Kuantum Papers: a return of 5.78 %
Quarterly Results
Sales for period ended Sep 2021 is Rs 201.0 cr compared to Rs 69.0 cr for period ended Sep 2020, a rise of 191.3%
Company reported operating profit of Rs 40.0 cr for period ended Sep 2021, operating profit margin at 19.9 %.
Operating profit was negative for the same period last year thus company has improved its margins this year
The EPS for Sep 2021 was Rs 1.2 compared to Rs -0.62 for previous quarter ended Jun 2021 and Rs -0.65 for Sep 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 636.0 cr for period ended TTM vis-vis sales of Rs 404.0 cr for the period ended Mar 2021, a healthy growth of 36.5%. The 3 year sales cagr stood at -7.1%.
Operating margins expanded to 15.0% for period ended TTM vis-vis 7.0% for period ended Mar 2021, expansion of 800.0 bps.
Net Profit reported at Rs 14.0 cr for period ended TTM vis-vis sales of Rs -13.0 cr for the period ended Mar 2021, rising 192.9%.
Company reported a poor Net Profit CAGR of -43.6% 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 80.0 cr for period ended Mar 2021 vis-vis Rs 75.0 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 6.0% over the last 3 Years. – The stock has given a return of 98% on a 1 Year basis vis-vis a return of 8% over the last 3 Years. – The compounded sales growth on a TTM bassis is -17% vis-vis a compounded sales growth of -17% over the last 3 Years. – The compounded profit growth on a TTM basis is -82% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Sep 2021 fii holding stood at 0.0% vis-vis 0.01% for Jun 2021 – Public shareholding has remained largely constant. The Sep 2021 public holding stood at 29.69% vis-vis 29.68% for Jun 2021
Conclusion
– Stock is trading at 0.82 times its book value
– is expected to give good quarter – has low interest coverage ratio.
-The company has delivered a poor sales growth of -5.14% over past five years.
– has a low return on equity of 5.96% for last 3 years.
– might be capitalizing the interest cost
-Promoters have pledged 78.90% of their holding.
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 78.19 and is trading at 79.2 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
