Mehabe score: 3 G Factor: 3 Piotski Score: 5 The stock has a rating SELL. 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 5.
Description
Parag Milk Foods Ltd, founded in 1992 by Mr. Devendra Shah is involved in the development and promotion of 100% fresh cow’s milk and milk products under international brand names with a diverse portfolio in over 10 product categories. #
Main Points
Market Leadership and innovation
It is the 2nd Largest Player in Cheese in India with a 35% Market Share.
It is a leader in the Cow Ghee category with its brand ‘Gowardhan’ Ghee
It is India’s First Company to launch a truly ‘Made-in-India’ B2C Whey protein powder under Brand ‘Avvatar’ in 2017.
It is the only company to manufacture Fresh Paneer with a 75 Day Shelf Life.
Its cheese plant has the largest production capacity in India, with a raw cheese production capacity of 40 MT per day.Site:PARAGMILKMain Symbol:PARAGMILK
Stock trades at 117.0, below its 50dma 131.04 and below its 200dma 124.07. The stock remains bearish on technicals
The 52 week high is at 157.80 and the 52week low is at 91.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– Debtor days have improved from 39.80 to 31.50 days.
Weakness
– Promoter holding has decreased over last quarter: -5.45%
-The company has delivered a poor sales growth of 2.28% over past five years.
– has a low return on equity of 9.27% for last 3 years.
-Dividend payout has been low at 10.57% of profits over last 3 years
Competition
– The industry trades at a mean P/E of 39.6x. Tasty Bite Eat. trades at the industry’s max P/E of 102.78x. PARAGMILK trades at a P/E of 32.0x
– Industry’s mean G-Factor is 3.6 while the mean Piotski score is 8.0. PARAGMILK has a G-Factor of 3 and Piotski scoreof 5.
– Average 1 month return for industry is -2.6%. The max 1- month return was given by Varun Beverages: a return of 14.44 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 438.0 cr compared to Rs 436.0 cr for period ended Jun 2020, a rise of 0.5%
Operating Profits reported at Rs 45.0 cr for period ended Jun 2021 vis-vis 30.0 for period ended Jun 2020 .
Operating Margins expanded 339.3 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 1.83 compared to Rs -1.15 for previous quarter ended Mar 2021 and Rs 0.39 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1845.0 cr for period ended TTM vis-vis sales of Rs 1842.0 cr for the period ended Mar 2021, a growth of 0.2%. The 3 year sales cagr stood at -8.3%.
Operating margins expanded to 8.0% for period ended TTM vis-vis 7.0% for period ended Mar 2021, expansion of 100.0 bps.
Net Profit reported at Rs 35.0 cr for period ended TTM vis-vis sales of Rs 21.0 cr for the period ended Mar 2021, rising 40.0%.
Company reported a poor Net Profit CAGR of -33.9% 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 100.0 cr for period ended Mar 2021 vis-vis Rs -66.0 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 2.0% compared to 9.0% 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 -18% vis-vis a compounded sales growth of -2% over the last 3 Years. – The compounded profit growth on a TTM basis is -50% vis-vis a compounded profit growth of -39% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 5.76% vis-vis 6.1% for Mar 2021 – Public shareholding has fallen for the period ended Jun 2021. The Jun 2021 public holding stood at 36.08% vis-vis 41.5% for Mar 2021
Conclusion
– Debtor days have improved from 39.80 to 31.50 days. – Promoter holding has decreased over last quarter: -5.45%
-The company has delivered a poor sales growth of 2.28% over past five years.
– has a low return on equity of 9.27% for last 3 years.
-Dividend payout has been low at 10.57% of profits over last 3 years
Fundamentally, the stock remains weak. The business fundamentals are on shaky ground. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock reflects the poor fundamentals. The stock remains below its 50 DMA 131.04 and is trading at 117.0. It has shown near term lack of bullish momentum. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
