Mehabe score: 6 G Factor: 2 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 2 and Piotski score of 5.
Description
Sangam (India) Limited is an India-based textile company. The Company manufactures polyester viscose (PV) yarn. The Company’s segments include Domestic and Export.Site:SANGAMINDMain Symbol:SANGAMIND
Stock trades at 142.0, above its 50dma 112.36. It also trades above its 200dma 85.89. The stock remains bullish on techicals
The 52 week high is at 153.95 and the 52week low is at 44.65
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
-Stock is trading at 1.10 times its book value
– is expected to give good quarter
– has been maintaining a healthy dividend payout of 45.20%
Weakness
– The company has delivered a poor sales growth of -2.09% over past five years.
– has a low return on equity of 2.06% for last 3 years.
Competition
– The industry trades at a mean P/E of 13.0x. Banswara Syntex trades at the industry’s max P/E of 30.37x. SANGAMIND trades at a P/E of 12.2x
– Industry’s mean G-Factor is 4.9 while the mean Piotski score is 8.0. SANGAMIND has a G-Factor of 2 and Piotski scoreof 5.
– Average 1 month return for industry is 40.0%. The max 1- month return was given by Suryalata Spg.: a return of 88.46 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 410.0 cr compared to Rs 109.0 cr for period ended Jun 2020, a rise of 276.1%
Company reported operating profit of Rs 49.0 cr for period ended Jun 2021, operating profit margin at 12.0 %.
Operating profit was negative for the same period last year thus company has improved its margins this year
The EPS for Jun 2021 was Rs 3.04 compared to Rs 7.86 for previous quarter ended Mar 2021 and Rs -8.16 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1655.0 cr for period ended TTM vis-vis sales of Rs 1354.0 cr for the period ended Mar 2021, a healthy growth of 18.2%. The 3 year sales cagr stood at -4.1%.
Operating margins expanded to 11.0% for period ended TTM vis-vis 9.0% for period ended Mar 2021, expansion of 200.0 bps.
Net Profit reported at Rs 51.0 cr for period ended TTM vis-vis sales of Rs 5.0 cr for the period ended Mar 2021, rising 90.2%.
Company recorded a healthy Net Profit CAGR of 47.2% 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 had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 1.0% compared to 2.0% over the last 3 Years. – The stock has given a return of 155% on a 1 Year basis vis-vis a return of 20% over the last 3 Years. – The compounded sales growth on a TTM bassis is 15% vis-vis a compounded sales growth of -6% over the last 3 Years. – The compounded profit growth on a TTM basis is 354% vis-vis a compounded profit growth of -44% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 0.0% vis-vis 0.0% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 39.64% vis-vis 38.52% for Mar 2021
Conclusion
– has reduced debt.
-Stock is trading at 1.10 times its book value
– is expected to give good quarter
– has been maintaining a healthy dividend payout of 45.20% – The company has delivered a poor sales growth of -2.09% over past five years.
– has a low return on equity of 2.06% for last 3 years.
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 112.36 and is trading at 142.0 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
