Mehabe score: 5 G Factor: 2 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 2 and Piotski score of 4.
Description
LTTS is an engineering services provider incorporated in 2012, offers engineering,, research and development (ER&D) and digitalization solutions to companies in the areas such as Transportation, Industrial Products, Telecom and Hi-Tech, Medical Devices and Plant
Engineering. LTTS’ customer base includes 69 Fortune 500 companies and 53 of the world’s top ER&D companies.The business also provides digital engineering advisory services.The company went public on September 23, 2016. LTTS has 296 global clients in 25+ countries.
Main Points
Business Segments
The Company has five Business Segments, namely Transportation, Plant Engineering, Industrial Products, Medical Devices, and Telecom & Hi-Tech. #Site:LTTSMain Symbol:LTTS
Stock trades at 2911.0, above its 50dma 2791.69. It also trades above its 200dma 2416.07. The stock remains bullish on techicals
The 52 week high is at 3062.45 and the 52week low is at 1325.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is almost debt free.
– has a good return on equity (ROE) track record: 3 Years ROE 28.08%
– has been maintaining a healthy dividend payout of 30.05%
Weakness
– Stock is trading at 8.81 times its book value
Competition
– The industry trades at a mean P/E of 32.6x. Happiest Minds trades at the industry’s max P/E of 118.75x. LTTS trades at a P/E of 47.3x
– Industry’s mean G-Factor is 3.7 while the mean Piotski score is 9.0. LTTS has a G-Factor of 2 and Piotski scoreof 4.
– Average 1 month return for industry is 16.7%. The max 1- month return was given by Happiest Minds: a return of 41.86 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 1440.0 cr compared to Rs 1447.0 cr for period ended Mar 2020, a fall of 0.5%
Operating Profits reported at Rs 293.0 cr for period ended Mar 2021 vis-vis 268.0 for period ended Mar 2020 .
Operating Margins expanded 182.6 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 18.52 compared to Rs 17.72 for previous quarter ended Dec 2020 and Rs 19.6 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 5450.0 cr for period ended Mar 2021 vis-vis sales of Rs 5619.0 cr for the period ended Mar 2020, a fall of 3.1%. The 3 year sales cagr stood at 13.3%.
Operating margins shrank to 18.0% for period ended Mar 2021 vis-vis 20.0% for period ended Mar 2020, contraction of 200.0 bps.
Net Profit reported at Rs 663.0 cr for period ended Mar 2021 vis-vis sales of Rs 819.0 cr for the period ended Mar 2020, falling 23.5%.
Company recorded a Net Profit CAGR of 9.4% 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 1327.0 cr for period ended Mar 2021 vis-vis Rs 638.0 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 21.0% compared to 28.0% over the last 3 Years. – The stock has given a return of 102% on a 1 Year basis vis-vis a return of 31% over the last 3 Years. – The compounded sales growth on a TTM bassis is -3% vis-vis a compounded sales growth of 13% over the last 3 Years. – The compounded profit growth on a TTM basis is -21% vis-vis a compounded profit growth of 9% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 8.92% vis-vis 9.06% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 10.17% vis-vis 10.34% for Mar 2021
Conclusion
– has reduced debt.
– is almost debt free.
– has a good return on equity (ROE) track record: 3 Years ROE 28.08%
– has been maintaining a healthy dividend payout of 30.05% – Stock is trading at 8.81 times its book value
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 2791.69 and is trading at 2911.0 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
