Investment Memo: SKFINDIA

[s2If !current_user_can(access_s2member_level1)][lwa][/s2If] [s2If current_user_can(access_s2member_level1)]

Our Rating: HOLD

Mehabe score: 5
G Factor: 4
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 4 and Piotski score of 7.

Description

SKF India is leading supplier of products, solutions & services within rolling bearing, seals, mechatronics, and lubrication system.(Source : 202003 Annual Report Page No:132)Site: SKFINDIAMain Symbol: SKFINDIA

Price Chart

Technical Analysis

• Stock trades at 2726.0, above its 50dma 2514.58. It also trades above its 200dma 2165.5. The stock remains bullish on techicals
• The 52 week high is at 2939.00 and the 52week low is at 1426.55

Price Chart

P/E Chart

Sales and Margin

Strengths

– is almost debt free.
– has been maintaining a healthy dividend payout of 88.05%

Weakness

– Stock is trading at 8.62 times its book value
-The company has delivered a poor sales growth of -2.28% over past five years.
-Debtor days have increased from 66.13 to 79.74 days.

Competition

– The industry trades at a mean P/E of 38.0x. Vishal Bearings trades at the industry’s max P/E of 91.85x. SKFINDIA trades at a P/E of 45.4x
– Industry’s mean G-Factor is 2.8 while the mean Piotski score is 7.0. SKFINDIA has a G-Factor of 4 and Piotski scoreof 7.
– Average 1 month return for industry is 3.0%. The max 1- month return was given by Bimetal Bearings: a return of 18.24 %

Quarterly Results

• Sales for period ended Jun 2021 is Rs 694.0 cr compared to Rs 301.0 cr for period ended Jun 2020, a rise of 130.6%
• Company reported operating profit of Rs 114.0 cr for period ended Jun 2021, operating profit margin at 16.4 %.
• 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 16.0 compared to Rs 21.21 for previous quarter ended Mar 2021 and Rs -0.05 for Jun 2020

Profit & Loss Statement

Profit&Loss Comments

• Company reported sales of Rs 3063.0 cr for period ended TTM vis-vis sales of Rs 2671.0 cr for the period ended Mar 2021, a healthy growth of 12.8%. The 3 year sales cagr stood at 0.3%.
• Operating margins expanded to 17.0% for period ended TTM vis-vis 16.0% for period ended Mar 2021, expansion of 100.0 bps.
• Net Profit reported at Rs 377.0 cr for period ended TTM vis-vis sales of Rs 298.0 cr for the period ended Mar 2021, rising 21.0%.
• Company recorded a Net Profit CAGR of 3.9% 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 17.0% compared to 17.0% over the last 3 Years.
– The stock has given a return of 73% on a 1 Year basis vis-vis a return of 18% over the last 3 Years.
– The compounded sales growth on a TTM bassis is -6% vis-vis a compounded sales growth of -1% over the last 3 Years.
– The compounded profit growth on a TTM basis is 13% vis-vis a compounded profit growth of 0% over the last 3 Years.

Ratios

Shareholding Pattern

– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 5.11% vis-vis 5.31% for Mar 2021
– Public shareholding has remained largely constant. The Jun 2021 public holding stood at 14.42% vis-vis 12.92% for Mar 2021

Conclusion

– is almost debt free.
– has been maintaining a healthy dividend payout of 88.05% – Stock is trading at 8.62 times its book value
-The company has delivered a poor sales growth of -2.28% over past five years.
-Debtor days have increased from 66.13 to 79.74 days.

• 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 2514.58 and is trading at 2726.0, thus bullish price action wise.
• Thus, overall we retain a HOLD on the stock.

[/s2If]
Join Our Telegram Group