Mehabe score: 4 G Factor: 5 Piotski Score: 6 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 5 and Piotski score of 6.
Description
Solara Active Pharma Sciences undertakes the business of manufacturing, production, processing, formulating, sale, import, export, merchandising, distributing, trading of and dealing in active pharmaceutical ingredients.(Source : 202003 Annual Report Page No: 97)
Main Points
Established Player #
5 Manufacturing Plants
25 Successful USFDA Audits
2 R&D Centres
150+ DMF Fillings #Site:SOLARAMain Symbol:SOLARA
Stock trades at 1645.0, below its 50dma 1667.5. However it is trading above its 200dma 1408.76. The stock remains weak in the short term due to near term bearish momentum. However overall bullish structure remains intact. Price action will further build up as it moves above its dma50, currently situated at 1667.5.
The 52 week high is at 1859.95 and the 52week low is at 647.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
Weakness
– Stock is trading at 3.72 times its book value
-Promoter holding has decreased over last quarter: -3.03%
-Tax rate seems low
– has a low return on equity of 13.11% for last 3 years.
-Debtor days have increased from 82.60 to 109.23 days.
Competition
– The industry trades at a mean P/E of 30.3x. Dr Reddy’s Labs trades at the industry’s max P/E of 45.11x. SOLARA trades at a P/E of 26.7x
– Industry’s mean G-Factor is 2.5 while the mean Piotski score is 9.0. SOLARA has a G-Factor of 5 and Piotski scoreof 6.
– Average 1 month return for industry is -2.7%. The max 1- month return was given by Sun Pharma.Inds.: a return of 13.13 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 444.0 cr compared to Rs 297.0 cr for period ended Mar 2020, a rise of 49.5%
Operating Profits reported at Rs 99.0 cr for period ended Mar 2021 vis-vis 50.0 for period ended Mar 2020 .
Operating Margins expanded 546.2 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 15.77 compared to Rs 18.32 for previous quarter ended Dec 2020 and Rs 6.64 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1617.0 cr for period ended Mar 2021 vis-vis sales of Rs 1322.0 cr for the period ended Mar 2020, a healthy growth of 18.2%. The 3 year sales cagr stood at 45.9%.
Operating margins expanded to 24.0% for period ended Mar 2021 vis-vis 20.0% for period ended Mar 2020, expansion of 400.0 bps.
Net Profit reported at Rs 221.0 cr for period ended Mar 2021 vis-vis sales of Rs 115.0 cr for the period ended Mar 2020, rising 0%.
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 improved its Return on Equity (RoE) metric. The RoE on Last Year basis was 17.0% compared to 13.0% over the last 3 Years. – The stock has given a return of 116% on a 1 Year basis vis-vis a return of 104% over the last 3 Years. – The compounded sales growth on a TTM bassis is 22% vis-vis a compounded sales growth of 46% over the last 3 Years. – The compounded profit growth on a TTM basis is 93% vis-vis a compounded profit growth of 735% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has risen for the period ended Jun 2021. The Jun 2021 fii holding stood at 16.6% vis-vis 13.65% for Mar 2021 – Public shareholding has fallen for the period ended Jun 2021. The Jun 2021 public holding stood at 35.92% vis-vis 38.26% for Mar 2021
Conclusion
– has reduced debt. – Stock is trading at 3.72 times its book value
-Promoter holding has decreased over last quarter: -3.03%
-Tax rate seems low
– has a low return on equity of 13.11% for last 3 years.
-Debtor days have increased from 82.60 to 109.23 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 below its 50 DMA 1667.5 and is trading at 1645.0. Shows a near term lack of buying interest.
