Mehabe score: 3 G Factor: 2 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 2 and Piotski score of 5.
Description
Reliance Communications has established a pan-India, next generation, digital network that is capable of supporting best-of-class services spanning the entire communications value chain. RCOM owns and operate the worlds largest next generation IP enabled connectivity infrastructure, comprising of fibre optic cable systems in India and globally.Site:RCOMMain Symbol:RCOM
Stock trades at 2.9, below its 50dma 3.06. However it is trading above its 200dma 2.63. The stock remains weak in the short term due to near term bearish momentum. However overall bullish structure remains intact. Price action will further build up as it moves above its dma50, currently situated at 3.06.
The 52 week high is at 5.49 and the 52week low is at 1.31
Price Chart
P/E Chart
Sales and Margin
Strengths
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Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -50.51% over past five years.
-Promoter holding is low: 5.18%
-Contingent liabilities of Rs.12377.00 Cr.
– has high debtors of 215.16 days.
-Promoter holding has decreased over last 3 years: -48.32%
Competition
– The industry trades at a mean P/E of 58.9x. Bharti Airtel trades at the industry’s max P/E of 152.61x. RCOM trades at a P/E of x
– Industry’s mean G-Factor is 1.6 while the mean Piotski score is 8.0. RCOM has a G-Factor of 2 and Piotski scoreof 5.
– Average 1 month return for industry is 13.6%. The max 1- month return was given by Tata Tele. Mah.: a return of 91.02 %
Quarterly Results
Sales for period ended Sep 2021 is Rs 136.0 cr compared to Rs 197.0 cr for period ended Sep 2020, a fall of 31.0%
Company reported negative operating profit of Rs -1588.0 cr for period ended Sep 2021. For same period last year, operating profit was -1374.0
The EPS for Sep 2021 was Rs -5.87 compared to Rs -5.81 for previous quarter ended Jun 2021 and Rs -5.13 for Sep 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 636.0 cr for period ended TTM vis-vis sales of Rs 760.0 cr for the period ended Mar 2021, a fall of 19.5%. The 3 year sales cagr stood at -45.9%.
Operating margins expanded to -566.0% for period ended TTM vis-vis -739.0% for period ended Mar 2021, expansion of 17300.0 bps.
Net Profit reported at Rs -6195.0 cr for period ended TTM vis-vis sales of Rs -5791.0 cr for the period ended Mar 2021, falling 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 328.0 cr for period ended Mar 2021 vis-vis Rs 19.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The stock has given a return of 81% on a 1 Year basis vis-vis a return of -40% over the last 3 Years. – The compounded sales growth on a TTM bassis is -32% vis-vis a compounded sales growth of -45% over the last 3 Years. – The compounded profit growth on a TTM basis is 93% vis-vis a compounded profit growth of 21% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Sep 2021 fii holding stood at 0.17% vis-vis 0.21% for Jun 2021 – Public shareholding has remained largely constant. The Sep 2021 public holding stood at 89.17% vis-vis 89.13% for Jun 2021
Conclusion
– – has low interest coverage ratio.
-The company has delivered a poor sales growth of -50.51% over past five years.
-Promoter holding is low: 5.18%
-Contingent liabilities of Rs.12377.00 Cr.
– has high debtors of 215.16 days.
-Promoter holding has decreased over last 3 years: -48.32%
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 3.06 and is trading at 2.9. 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
