Mehabe score: 2 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
The company is deposit-taking NBFC & part of Muthoot Group. The group has established a strong reputation and brand in India, particularly in South India. The promoters have more than 30 years of experience in the lending business.
The company started its business in 2-wheeler financing in 1998 and since then expanded into financing used cars, consumer durables, and small-ticket business loans.
Main Points
Strategic benefits from Muthoot Group
MCSL has common promoters and promoter directors like the other MPG companies.#
Besides its own sales force, MCSL also has access to the 3500+ branch network and large customer base of MFL for the origination of new loans and collection.
Initially, it provided gold loans but subsequently, as the group scaled up its gold financing business in MFL, MCSL entered the two-wheeler financing segment in fiscal 2008 and gradually exited the gold loan business.Site:MUTHOOTCAP
Market Cap:
Rs 677 cr
Price:
412.0
Trading pe:
12.0x
Book-value:
326/share
Div yield:
0.00 %
Earning yield:
12.63%
Face-value:
10.0/share
52week high:
528.00
52week low:
336.30
Technical Analysis
Stock trades at 412.0, above its 50dma 401.52. It also trades above its 200dma 401.21. The stock remains bullish on techicals
The 52 week high is at 528.00 and the 52week low is at 336.30
Price Chart
P/E Chart
Sales and Margin
Strengths
– has delivered good profit growth of 22.09% CAGR over last 5 years
-‘s median sales growth is 30.33% of last 10 years
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
Competition
– The industry trades at a mean P/E of 20.8x. SBI Cards trades at the industry’s max P/E of 96.15x. MUTHOOTCAP trades at a P/E of 12.0x
– Industry’s mean G-Factor is 4.4 while the mean Piotski score is 7.0. MUTHOOTCAP has a G-Factor of 3 and Piotski scoreof 4.
– Average 1 month return for industry is 4.3%. The max 1- month return was given by Muthoot Finance: a return of 16.57 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 109.19 cr compared to Rs 146.9 cr for period ended Mar 2020, a fall of 25.7%
Operating Profits reported at Rs 55.21 cr for period ended Mar 2021 vis-vis 71.72 for period ended Mar 2020 .
Operating Margins expanded 174.1 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 5.5 compared to Rs 8.35 for previous quarter ended Dec 2020 and Rs 8.45 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 504.0 cr for period ended Mar 2021 vis-vis sales of Rs 586.0 cr for the period ended Mar 2020, a fall of 16.3%. The 3 year sales cagr stood at 8.2%.
Operating margins shrank to 70.0% for period ended Mar 2021 vis-vis 95.0% for period ended Mar 2020, contraction of 2500.0 bps.
Net Profit reported at Rs 51.0 cr for period ended Mar 2021 vis-vis sales of Rs 60.0 cr for the period ended Mar 2020, falling 17.6%.
Company reported a poor Net Profit CAGR of -1.9% over the last 3 years
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 13.0% compared to 17.0% over the last 3 Years. – The stock has given a return of -1% on a 1 Year basis vis-vis a return of -27% over the last 3 Years. – The compounded sales growth on a TTM bassis is -6% vis-vis a compounded sales growth of 27% over the last 3 Years. – The compounded profit growth on a TTM basis is -19% vis-vis a compounded profit growth of 26% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has risen for the period ended Mar 2021. The Mar 2021 fii holding stood at 9.58% vis-vis 7.22% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 19.81% vis-vis 18.51% for Dec 2020
Conclusion
– has delivered good profit growth of 22.09% CAGR over last 5 years
-‘s median sales growth is 30.33% of last 10 years – Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
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 401.52 and is trading at 412.0 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
