Mehabe score: 3 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
Rane Holdings Limited (RHL), founded in 1929 is headquartered in Chennai, India. It is the holding company of Rane Group and holds its trademark.# #
Main Points
Products
It is engaged in three main-stream of activities:
Holding strategic investments in subsidiaries and joint ventures (collectively called ‘Rane Group’) engaged in the manufacturing and marketing of automotive components for the transportation industry.
Licensing trademark
Providing services like Management Consultancy, Information Technology, Business Development, etc., which is unique and tailormade to each of the Rane Group Companies.Site:RANEHOLDINMain Symbol:RANEHOLDIN
Stock trades at 739.0, above its 50dma 676.67. It also trades above its 200dma 611.56. The stock remains bullish on techicals
The 52 week high is at 782.75 and the 52week low is at 391.05
Price Chart
P/E Chart
Sales and Margin
Strengths
–
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -3.27% over past five years.
– has a low return on equity of 1.55% for last 3 years.
-Earnings include an other income of Rs.43.00 Cr.
-Debtor days have increased from 72.15 to 87.07 days.
Competition
– The industry trades at a mean P/E of 25.5x. SBI Cards trades at the industry’s max P/E of 108.34x. RANEHOLDIN trades at a P/E of x
– Industry’s mean G-Factor is 2.8 while the mean Piotski score is 6.0. RANEHOLDIN has a G-Factor of 3 and Piotski scoreof 4.
– Average 1 month return for industry is 5.4%. The max 1- month return was given by Rane Holdings: a return of 14.33 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 670.0 cr compared to Rs 494.0 cr for period ended Mar 2020, a rise of 35.6%
Operating Profits reported at Rs 31.0 cr for period ended Mar 2021 vis-vis 33.0 for period ended Mar 2020 .
Operating Margins contracted -205.3 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs -15.63 compared to Rs 17.32 for previous quarter ended Dec 2020 and Rs -0.69 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 2038.0 cr for period ended Mar 2021 vis-vis sales of Rs 2159.0 cr for the period ended Mar 2020, a fall of 5.9%. The 3 year sales cagr stood at -4.6%.
Operating margins shrank to 4.0% for period ended Mar 2021 vis-vis 7.0% for period ended Mar 2020, contraction of 300.0 bps.
Net Profit reported at Rs -51.0 cr for period ended Mar 2021 vis-vis sales of Rs -3.0 cr for the period ended Mar 2020, falling 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
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 -9.0% compared to 2.0% over the last 3 Years. – The stock has given a return of 77% on a 1 Year basis vis-vis a return of -28% over the last 3 Years. – The compounded sales growth on a TTM bassis is -6% vis-vis a compounded sales growth of -5% over the last 3 Years. – The compounded profit growth on a TTM basis is -1864% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 0.02% vis-vis 0.0% for Mar 2021 – Public shareholding has risen for the period ended Jun 2021. The Jun 2021 public holding stood at 42.93% vis-vis 37.96% for Mar 2021
Conclusion
– – has low interest coverage ratio.
-The company has delivered a poor sales growth of -3.27% over past five years.
– has a low return on equity of 1.55% for last 3 years.
-Earnings include an other income of Rs.43.00 Cr.
-Debtor days have increased from 72.15 to 87.07 days.
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 676.67 and is trading at 739.0 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
