Mehabe score: 6 G Factor: 4 Piotski Score: 3 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 4 and Piotski score of 3.
Description
Rane (Madras) Ltd. was founded in 1929, it manufactures steering and suspension linkage products, steering gear products and specialized aluminum high pressure die-casting products and provides connected mobility solutions. The Company is a supplier to major manufacturers of Passenger Vehicles, Utility Vehicles and Farm Tractors and has a strong presence in mechanical steering gears and hydrostatic gear systems. The co. headquarters is in Chennai.Site:RMLMain Symbol:RML
Stock trades at 402.0, above its 50dma 390.08. It also trades above its 200dma 351.11. The stock remains bullish on techicals
The 52 week high is at 496.00 and the 52week low is at 192.10
Price Chart
P/E Chart
Sales and Margin
Strengths
– is expected to give good quarter
-Promoter holding has increased by 1.69% over last quarter.
Weakness
– Stock is trading at 3.61 times its book value
– has low interest coverage ratio.
-The company has delivered a poor sales growth of 7.67% over past five years.
– has a low return on equity of -16.99% for last 3 years.
– might be capitalizing the interest cost
-Earnings include an other income of Rs.54.12 Cr.
-Debtor days have increased from 63.35 to 77.78 days.
Competition
– The industry trades at a mean P/E of 22.6x. WABCO India trades at the industry’s max P/E of 91.45x. RML trades at a P/E of x
– Industry’s mean G-Factor is 3.4 while the mean Piotski score is 7.0. RML has a G-Factor of 4 and Piotski scoreof 3.
– Average 1 month return for industry is 6.4%. The max 1- month return was given by Bosch: a return of 13.88 %
Quarterly Results
Sales for period ended Sep 2021 is Rs 458.41 cr compared to Rs 318.45 cr for period ended Sep 2020, a rise of 44.0%
Operating Profits reported at Rs 20.55 cr for period ended Sep 2021 vis-vis 12.68 for period ended Sep 2020 .
Operating Margins expanded 50.1 bps for period ended Sep 2021 vis-vis Sep 2020 .
The EPS for Sep 2021 was Rs 1.48 compared to Rs 10.46 for previous quarter ended Jun 2021 and Rs -7.98 for Sep 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1638.0 cr for period ended TTM vis-vis sales of Rs 1267.0 cr for the period ended Mar 2021, a healthy growth of 22.6%. The 3 year sales cagr stood at 1.7%.
Operating margins expanded to 4.0% for period ended TTM vis-vis 2.0% for period ended Mar 2021, expansion of 200.0 bps.
Net Profit reported at Rs 8.0 cr for period ended TTM vis-vis sales of Rs -61.0 cr for the period ended Mar 2021, rising 862.5%.
Company recorded a healthy Net Profit CAGR of 58.7% over the last 3 years
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 -35.0% compared to -17.0% over the last 3 Years. – The stock has given a return of 96% on a 1 Year basis vis-vis a return of -5% over the last 3 Years. – The compounded sales growth on a TTM bassis is 59% vis-vis a compounded sales growth of -3% over the last 3 Years. – The compounded profit growth on a TTM basis is 69% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Sep 2021 public holding stood at 28.86% vis-vis 30.55% for Jun 2021
Conclusion
– is expected to give good quarter
-Promoter holding has increased by 1.69% over last quarter. – Stock is trading at 3.61 times its book value
– has low interest coverage ratio.
-The company has delivered a poor sales growth of 7.67% over past five years.
– has a low return on equity of -16.99% for last 3 years.
– might be capitalizing the interest cost
-Earnings include an other income of Rs.54.12 Cr.
-Debtor days have increased from 63.35 to 77.78 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 390.08 and is trading at 402.0 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
