Mehabe score: 4 G Factor: 5 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 5 and Piotski score of 4.
Description
Shriram City Union Finance Ltd incorporated in 1986 is a deposit-accepting NBFC, Shriram City is a part of Shriram Group. Its primary line of business is MSMEs & two-wheeler financing. It also deals in Funding commercial vehicles, passenger vehicles, and home loans, loans against gold ornaments, and personal consumption. # #
Main Points
Strong presence in Rural Areas
The company has a strong presence in rural & semi-urban with 930 branches, customer base of 40.13 lacs with 24156 employees. #
67% of branches located in southern region 21% in west & north region 12% #Site:SHRIRAMCITMain Symbol:SHRIRAMCIT
Stock trades at 1702.0, above its 50dma 1655.34. It also trades above its 200dma 1379.06. The stock remains bullish on techicals
The 52 week high is at 1962.90 and the 52week low is at 645.25
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 8.98% over past five years.
-Dividend payout has been low at 12.95% of profits over last 3 years
Competition
– The industry trades at a mean P/E of 24.9x. SBI Cards trades at the industry’s max P/E of 95.33x. SHRIRAMCIT trades at a P/E of 10.6x
– Industry’s mean G-Factor is 4.6 while the mean Piotski score is 6.0. SHRIRAMCIT has a G-Factor of 5 and Piotski scoreof 4.
– Average 1 month return for industry is -0.4%. The max 1- month return was given by Bajaj Holdings: a return of 9.49 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 1596.0 cr compared to Rs 1546.0 cr for period ended Mar 2020, a rise of 3.2%
Operating Profits reported at Rs 558.0 cr for period ended Mar 2021 vis-vis 725.0 for period ended Mar 2020 .
Operating Margins contracted -1193.3 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 44.7 compared to Rs 45.46 for previous quarter ended Dec 2020 and Rs 22.46 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 6154.0 cr for period ended Mar 2021 vis-vis sales of Rs 6233.0 cr for the period ended Mar 2020, a fall of 1.3%. The 3 year sales cagr stood at 4.2%.
Operating margins expanded to 1551.0% for period ended Mar 2021 vis-vis 1490.0% for period ended Mar 2020, expansion of 6100.0 bps.
Net Profit reported at Rs 1064.0 cr for period ended Mar 2021 vis-vis sales of Rs 1023.0 cr for the period ended Mar 2020, rising 3.9%.
Company recorded a healthy Net Profit CAGR of 12.8% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
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 13.0% compared to 15.0% over the last 3 Years. – The stock has given a return of 150% on a 1 Year basis vis-vis a return of -4% over the last 3 Years. – The compounded sales growth on a TTM bassis is -1% vis-vis a compounded sales growth of 4% over the last 3 Years. – The compounded profit growth on a TTM basis is 4% vis-vis a compounded profit growth of 13% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 28.47% vis-vis 27.96% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 33.36% vis-vis 33.53% for Dec 2020
Conclusion
– – has low interest coverage ratio.
-The company has delivered a poor sales growth of 8.98% over past five years.
-Dividend payout has been low at 12.95% of profits over 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 1655.34 and is trading at 1702.0 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
