Mehabe score: 3 G Factor: 2 Piotski Score: 6 The stock has a rating SELL. 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 6.
Description
Somi Conveyor Belting Ltd is in the business to manufacture conveyor belts for applications in the commercial, industrial, and consumer markets worldwide.[1]Site:SOMICONVEYMain Symbol:SOMICONV
Stock trades at 45.6, below its 50dma 53.77. However it is trading above its 200dma 44.97. 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 53.77.
The 52 week high is at 68.50 and the 52week low is at 19.05
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.86 times its book value
– is expected to give good quarter
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -4.20% over past five years.
– has a low return on equity of 3.23% for last 3 years.
-Contingent liabilities of Rs.21.56 Cr.
– has high debtors of 229.44 days.
Competition
– The industry trades at a mean P/E of 15.4x. Elgi Rubber Co trades at the industry’s max P/E of 225.15x. SOMICONVEY trades at a P/E of 30.7x
– Industry’s mean G-Factor is 3.8 while the mean Piotski score is 8.0. SOMICONVEY has a G-Factor of 2 and Piotski scoreof 6.
– Average 1 month return for industry is -2.6%. The max 1- month return was given by Rishiroop: a return of 8.24 %
Quarterly Results
Sales for period ended Sep 2021 is Rs 19.42 cr compared to Rs 6.45 cr for period ended Sep 2020, a rise of 201.1%
Operating Profits reported at Rs 1.73 cr for period ended Sep 2021 vis-vis 1.47 for period ended Sep 2020 .
Operating Margins contracted -1388.2 bps for period ended Sep 2021 vis-vis Sep 2020 .
The EPS for Sep 2021 was Rs 0.46 compared to Rs 0.14 for previous quarter ended Jun 2021 and Rs 0.11 for Sep 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 60.84 cr for period ended TTM vis-vis sales of Rs 46.85 cr for the period ended Mar 2021, a healthy growth of 23.0%. The 3 year sales cagr stood at 0.1%.
Operating margins shrank to 11.16% for period ended TTM vis-vis 14.45% for period ended Mar 2021, contraction of 329.0 bps.
Net Profit reported at Rs 2.16 cr for period ended TTM vis-vis sales of Rs 1.76 cr for the period ended Mar 2021, rising 18.5%.
Company recorded a healthy Net Profit CAGR of 11.7% 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 3.0% compared to 3.0% over the last 3 Years. – The stock has given a return of 120% on a 1 Year basis vis-vis a return of 12% over the last 3 Years. – The compounded sales growth on a TTM bassis is 33% vis-vis a compounded sales growth of -10% over the last 3 Years. – The compounded profit growth on a TTM basis is -26% vis-vis a compounded profit growth of 20% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Sep 2021 public holding stood at 40.91% vis-vis 40.95% for Jun 2021
Conclusion
– Stock is trading at 0.86 times its book value
– is expected to give good quarter – Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -4.20% over past five years.
– has a low return on equity of 3.23% for last 3 years.
-Contingent liabilities of Rs.21.56 Cr.
– has high debtors of 229.44 days.
Fundamentally, the stock remains weak. The business fundamentals are on shaky ground. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock reflects the poor fundamentals. The stock remains below its 50 DMA 53.77 and is trading at 45.6. It has shown near term lack of bullish momentum. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
