Mehabe score: 4 G Factor: 3 Piotski Score: 6 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 3 and Piotski score of 6.
Description
The company was established in 1989, it is a leading manufacturer and exporter of knitted garments for infants and children in India. These are manufactured at the integrated facilities that allow providing end-to-end garment manufacturing services from greige fabric to finished products. #, Mr. P. Sundararajan is the Chairman and Managing Director of our Company. . The company provides end-to-end garment manufacturing from greige fabric to finished products including bodysuits, sleepsuits, tops, and bottoms.
Stock trades at 297.0, above its 50dma 282.82. It also trades above its 200dma 207.8. The stock remains bullish on techicals
The 52 week high is at 361.80 and the 52week low is at 91.95
Price Chart
P/E Chart
Sales and Margin
Strengths
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Weakness
– The company has delivered a poor sales growth of 4.16% over past five years.
– has a low return on equity of 11.45% for last 3 years.
– might be capitalizing the interest cost
-Dividend payout has been low at 4.46% of profits over last 3 years
Competition
– The industry trades at a mean P/E of 20.8x. Garware Tech. trades at the industry’s max P/E of 38.46x. SPAL trades at a P/E of 12.6x
– Industry’s mean G-Factor is 3.5 while the mean Piotski score is 9.0. SPAL has a G-Factor of 3 and Piotski scoreof 6.
– Average 1 month return for industry is -4.2%. The max 1- month return was given by Trident: a return of 10.8 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 133.0 cr compared to Rs 61.0 cr for period ended Jun 2020, a rise of 118.0%
Operating Profits reported at Rs 28.0 cr for period ended Jun 2021 vis-vis 7.0 for period ended Jun 2020 .
Operating Margins expanded 957.7 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 4.5 compared to Rs 4.12 for previous quarter ended Mar 2021 and Rs -2.27 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 724.0 cr for period ended TTM vis-vis sales of Rs 652.0 cr for the period ended Mar 2021, a growth of 9.9%. The 3 year sales cagr stood at -4.3%.
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 61.0 cr for period ended TTM vis-vis sales of Rs 43.0 cr for the period ended Mar 2021, rising 29.5%.
Company reported a poor Net Profit CAGR of -5.8% 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 stock has given a return of 191% on a 1 Year basis vis-vis a return of -3% over the last 3 Years. – The compounded sales growth on a TTM bassis is 11% vis-vis a compounded sales growth of 0% over the last 3 Years. – The compounded profit growth on a TTM basis is 79% vis-vis a compounded profit growth of -2% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 0.05% vis-vis 0.02% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 23.52% vis-vis 23.57% for Mar 2021
Conclusion
– – The company has delivered a poor sales growth of 4.16% over past five years.
– has a low return on equity of 11.45% for last 3 years.
– might be capitalizing the interest cost
-Dividend payout has been low at 4.46% 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 282.82 and is trading at 297.0 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
