Mehabe score: 3 G Factor: 3 Piotski Score: 5 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 5.
Description
Precot Meridian Ltd. is an India-based manufacturer of yarn and fabrics. The company products include cotton yarn, sewing threads, fabrics and garments. The Company offers cotton yarn for knitting and weaving, cotton slub yarn for knitting and weaving, elitwist yarn for knitting and weaving, knitting yarn, weaving yarn, doubled yarn, gassed yarn, compact spun yarn for weaving, fancy yarn, normal slub yarn, reverse slub yarn for knitting and weaving and open end spun yarn.Site:PRECOT
Market Cap:
Rs 209 cr
Price:
174.0
Trading pe:
67.3x
Book-value:
253/share
Div yield:
0.00 %
Earning yield:
8.54%
Face-value:
10.0/share
52week high:
182.35
52week low:
19.75
Technical Analysis
Stock trades at 174.0, above its 50dma 137.76. It also trades above its 200dma 90.69. The stock remains bullish on techicals
The 52 week high is at 182.35 and the 52week low is at 19.75
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
-Stock is trading at 0.69 times its book value
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -0.56% over past five years.
– has a low return on equity of -7.39% for last 3 years.
-Promoters have pledged 82.92% of their holding.
Competition
– The industry trades at a mean P/E of 16.0x. Arvind Ltd trades at the industry’s max P/E of 999.29x. PRECOT trades at a P/E of 67.3x
– Industry’s mean G-Factor is 4.5 while the mean Piotski score is 8.0. PRECOT has a G-Factor of 3 and Piotski scoreof 5.
– Average 1 month return for industry is 12.5%. The max 1- month return was given by Precot: a return of 28.11 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 219.0 cr compared to Rs 181.0 cr for period ended Mar 2020, a rise of 21.0%
Operating Profits reported at Rs 44.0 cr for period ended Mar 2021 vis-vis 19.0 for period ended Mar 2020 .
Operating Margins expanded 959.4 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 24.21 compared to Rs 7.85 for previous quarter ended Dec 2020 and Rs -0.68 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 665.0 cr for period ended Mar 2021 vis-vis sales of Rs 726.0 cr for the period ended Mar 2020, a fall of 9.2%. The 3 year sales cagr stood at -2.1%.
Operating margins expanded to 14.0% for period ended Mar 2021 vis-vis 7.0% for period ended Mar 2020, expansion of 700.0 bps.
Net Profit reported at Rs 33.0 cr for period ended Mar 2021 vis-vis sales of Rs -17.0 cr for the period ended Mar 2020, rising 0%.
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 stock has given a return of 680% on a 1 Year basis vis-vis a return of 51% over the last 3 Years. – The compounded sales growth on a TTM bassis is -14% vis-vis a compounded sales growth of 2% over the last 3 Years. – The compounded profit growth on a TTM basis is 112% vis-vis a compounded profit growth of 14% over the last 3 Years.
Ratios
Conclusion
– has reduced debt.
-Stock is trading at 0.69 times its book value – has low interest coverage ratio.
-The company has delivered a poor sales growth of -0.56% over past five years.
– has a low return on equity of -7.39% for last 3 years.
-Promoters have pledged 82.92% 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 137.76 and is trading at 174.0 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
