Mehabe score: 7 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
Sheela Foam Limited is a leading player in India’s mattress and foam products industry and a leader in Polyurethane (PU) Foam. It has a nationwide presence in manufacturing PU Foam with a track record, since 1971. #
Main Points
Geographical Break up – #
India Contributes 80% of the revenue, Australia contributes 15% and Europe Contributes 5% of the revenue.Site:SFLMain Symbol:SFL
Stock trades at 2374.0, above its 50dma 2236.88. It also trades above its 200dma 1953.13. The stock remains bullish on techicals
The 52 week high is at 2498.10 and the 52week low is at 1222.15
Price Chart
P/E Chart
Sales and Margin
Strengths
– has delivered good profit growth of 18.10% CAGR over last 5 years
Weakness
– Stock is trading at 9.78 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of 9.46% over past five years.
-Debtor days have increased from 36.43 to 45.28 days.
-Promoter holding has decreased over last 3 years: -12.73%
Competition
– The industry trades at a mean P/E of 24.1x. Ludlow Jute trades at the industry’s max P/E of 3073.0x. SFL trades at a P/E of 48.7x
– Industry’s mean G-Factor is 4.2 while the mean Piotski score is 7.0. SFL has a G-Factor of 6 and Piotski scoreof 7.
– Average 1 month return for industry is 5.1%. The max 1- month return was given by Gloster Ltd: a return of 37.82 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 733.0 cr compared to Rs 504.0 cr for period ended Mar 2020, a rise of 45.4%
Operating Profits reported at Rs 84.0 cr for period ended Mar 2021 vis-vis 74.0 for period ended Mar 2020 .
Operating Margins contracted -322.3 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 11.92 compared to Rs 20.35 for previous quarter ended Dec 2020 and Rs 6.5 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 2435.0 cr for period ended Mar 2021 vis-vis sales of Rs 2121.0 cr for the period ended Mar 2020, a healthy growth of 12.9%. The 3 year sales cagr stood at 8.8%.
Operating margins expanded to 15.0% for period ended Mar 2021 vis-vis 14.0% for period ended Mar 2020, expansion of 100.0 bps.
Net Profit reported at Rs 238.0 cr for period ended Mar 2021 vis-vis sales of Rs 193.0 cr for the period ended Mar 2020, rising 18.9%.
Company recorded a healthy Net Profit CAGR of 21.1% 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 260.0 cr for period ended Mar 2021 vis-vis Rs 164.0 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 had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 23.0% compared to 22.0% over the last 3 Years. – The stock has given a return of 61% on a 1 Year basis vis-vis a return of 17% over the last 3 Years. – The compounded sales growth on a TTM bassis is 15% vis-vis a compounded sales growth of 9% over the last 3 Years. – The compounded profit growth on a TTM basis is 26% vis-vis a compounded profit growth of 21% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 1.33% vis-vis 1.29% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 2.07% vis-vis 2.13% for Mar 2021
Conclusion
– has delivered good profit growth of 18.10% CAGR over last 5 years – Stock is trading at 9.78 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of 9.46% over past five years.
-Debtor days have increased from 36.43 to 45.28 days.
-Promoter holding has decreased over last 3 years: -12.73%
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 2236.88 and is trading at 2374.0, thus bullish price action wise.
