Mehabe score: 4 G Factor: 2 Piotski Score: 7 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 7.
Description
NELCO is engaged in the Business of Network Systems and Automation & Control.Site:NELCOMain Symbol:NELCO
Stock trades at 960.0, above its 50dma 513.26. It also trades above its 200dma 344.25. The stock remains bullish on techicals
The 52 week high is at 756.10 and the 52week low is at 172.55
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– has a good return on equity (ROE) track record: 3 Years ROE 27.18%
– has been maintaining a healthy dividend payout of 18.85%
Weakness
– Stock is trading at 28.91 times its book value
-The company has delivered a poor sales growth of 2.49% over past five years.
Competition
– The industry trades at a mean P/E of 73.8x. ITI trades at the industry’s max P/E of 447.57x. NELCO trades at a P/E of 148.0x
– Industry’s mean G-Factor is 2.6 while the mean Piotski score is 7.0. NELCO has a G-Factor of 2 and Piotski scoreof 7.
– Average 1 month return for industry is 21.8%. The max 1- month return was given by NELCO: a return of 88.2 %
Quarterly Results
Sales for period ended Sep 2021 is Rs 61.22 cr compared to Rs 53.22 cr for period ended Sep 2020, a rise of 15.0%
Operating Profits reported at Rs 11.48 cr for period ended Sep 2021 vis-vis 10.08 for period ended Sep 2020 .
Operating Margins contracted -18.8 bps for period ended Sep 2021 vis-vis Sep 2020 .
The EPS for Sep 2021 was Rs 1.49 compared to Rs 1.92 for previous quarter ended Jun 2021 and Rs 0.97 for Sep 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 240.0 cr for period ended TTM vis-vis sales of Rs 226.0 cr for the period ended Mar 2021, a growth of 5.8%. The 3 year sales cagr stood at 7.9%.
Net Profit reported at Rs 16.0 cr for period ended TTM vis-vis sales of Rs 12.0 cr for the period ended Mar 2021, rising 25.0%.
Company reported a poor Net Profit CAGR of -10.1% 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 54.0 cr for period ended Mar 2021 vis-vis Rs 33.0 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 17.0% compared to 27.0% over the last 3 Years. – The stock has given a return of 434% on a 1 Year basis vis-vis a return of 59% over the last 3 Years. – The compounded sales growth on a TTM bassis is 5% vis-vis a compounded sales growth of 15% over the last 3 Years. – The compounded profit growth on a TTM basis is 16% vis-vis a compounded profit growth of 1% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Sep 2021 fii holding stood at 3.22% vis-vis 3.07% for Jun 2021 – Public shareholding has fallen for the period ended Sep 2021. The Sep 2021 public holding stood at 42.59% vis-vis 46.55% for Jun 2021
Conclusion
– has reduced debt.
– has a good return on equity (ROE) track record: 3 Years ROE 27.18%
– has been maintaining a healthy dividend payout of 18.85% – Stock is trading at 28.91 times its book value
-The company has delivered a poor sales growth of 2.49% over past five 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 513.26 and is trading at 960.0 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
