Mehabe score: 8 G Factor: 6 Piotski Score: 7 The stock has a rating 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 6 and Piotski score of 7.
Description
Started in 1975 as Punjab United Pesticides & Chemicals Limited (PUPCL) has now evolved as Punjab Chemicals and Crop Protection Limited (Punjab Chemicals), uniting all its divisions – Agro-technicals, Pharmaceuticals, Intermediates, Chemicals & International Trading, under one roof. The business of the Company is Performance Chemicals, which includes Agro Chemicals, Specialty Chemicals and other chemicals. The Company is also in contract manufacturing business producing products for Indian and multinational companies.
Main Points
Business Segment
The company operates under four divisions:
1. Agro and Base chemicals division (Derabassi, Punjab) (68% of revenue): Main focus area. The company is present in the entire value chain including intermediates, technicals, bulk formulations and branded formulations.
Manufacturing of APIs and Intermediates. The division also produces a range of derivatives from Gallic Acid.
The industrial chemical division makes Phosphoric acid by thermal process with the certification of FSSC: 22000 and supplying Food Grade Phosphoric.Site:PUNJABCHEMMain Symbol:PUNJABCHEM
Stock trades at 1425.0, above its 50dma 1247.73. It also trades above its 200dma 954.3. The stock remains bullish on techicals
The 52 week high is at 1478.60 and the 52week low is at 420.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is expected to give good quarter
– has delivered good profit growth of 47.59% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 26.12%
Weakness
– Stock is trading at 12.09 times its book value
-The company has delivered a poor sales growth of 4.76% over past five years.
Competition
– The industry trades at a mean P/E of 30.5x. Pidilite Inds. trades at the industry’s max P/E of 100.81x. PUNJABCHEM trades at a P/E of 35.6x
– Industry’s mean G-Factor is 4.0 while the mean Piotski score is 8.0. PUNJABCHEM has a G-Factor of 6 and Piotski scoreof 7.
– Average 1 month return for industry is 6.5%. The max 1- month return was given by Navin Fluo.Intl.: a return of 15.2 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 210.0 cr compared to Rs 107.0 cr for period ended Mar 2020, a rise of 96.3%
Operating Profits reported at Rs 23.0 cr for period ended Mar 2021 vis-vis 9.0 for period ended Mar 2020 .
Operating Margins expanded 254.1 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 8.55 compared to Rs 12.74 for previous quarter ended Dec 2020 and Rs 3.81 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 678.0 cr for period ended Mar 2021 vis-vis sales of Rs 550.0 cr for the period ended Mar 2020, a healthy growth of 18.9%. The 3 year sales cagr stood at 11.2%.
Operating margins expanded to 14.0% for period ended Mar 2021 vis-vis 8.0% for period ended Mar 2020, expansion of 600.0 bps.
Net Profit reported at Rs 49.0 cr for period ended Mar 2021 vis-vis sales of Rs 11.0 cr for the period ended Mar 2020, rising 77.6%.
Company recorded a healthy Net Profit CAGR of 42.3% 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 45.0 cr for period ended Mar 2021 vis-vis Rs 34.0 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 improved its Return on Equity (RoE) metric. The RoE on Last Year basis was 41.0% compared to 26.0% over the last 3 Years. – The stock has given a return of 214% on a 1 Year basis vis-vis a return of 33% over the last 3 Years. – The compounded sales growth on a TTM bassis is 23% vis-vis a compounded sales growth of 11% over the last 3 Years. – The compounded profit growth on a TTM basis is 619% vis-vis a compounded profit growth of 44% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 2.94% vis-vis 2.73% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 56.83% vis-vis 57.05% for Dec 2020
Conclusion
– has reduced debt.
– is expected to give good quarter
– has delivered good profit growth of 47.59% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 26.12% – Stock is trading at 12.09 times its book value
-The company has delivered a poor sales growth of 4.76% over past five years.
The business fundamentals of the stock remain stable. Stronger near term results will build interest in the stock. We suggest to wait for a upturn in business performance.
Technically, the stock remains above its 50 DMA 1247.73 and is trading at 1425.0, thus bullish price action wise.
