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Our Rating: SELL
Mehabe score: 1 G Factor: 2 Piotski Score: 3 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 3.
Description
Spandana Sphoorty Financial is primarily engaged in the business of micro finance providing small value unsecured loans to low-income customers in semi-urban and rural areas. Site:SPANDANA Main Symbol:SPANDANA
Stock trades at 415.0, below its 50dma 473.21 and below its 200dma 565.58. The stock remains bearish on technicals
The 52 week high is at 830.00 and the 52week low is at 384.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.98 times its book value
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
– has a low return on equity of 11.83% for last 3 years.
Competition
– The industry trades at a mean P/E of 27.0x. Bajaj Finance trades at the industry’s max P/E of 93.05x. SPANDANA trades at a P/E of x
– Industry’s mean G-Factor is 3.4 while the mean Piotski score is 6.0. SPANDANA has a G-Factor of 2 and Piotski scoreof 3.
– Average 1 month return for industry is 0.3%. The max 1- month return was given by Bajaj Finance: a return of 7.99 %
Quarterly Results
Sales for period ended Sep 2021 is Rs 372.0 cr compared to Rs 338.0 cr for period ended Sep 2020, a rise of 10.1%
Operating Profits reported at Rs 72.0 cr for period ended Sep 2021 vis-vis 163.0 for period ended Sep 2020 .
Operating Margins contracted -2887.0 bps for period ended Sep 2021 vis-vis Sep 2020 .
The EPS for Sep 2021 was Rs -9.14 compared to Rs 7.39 for previous quarter ended Jun 2021 and Rs 9.79 for Sep 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1572.0 cr for period ended TTM vis-vis sales of Rs 1444.0 cr for the period ended Mar 2021, a growth of 8.1%. The 3 year sales cagr stood at 14.9%.
Operating margins shrank to 34.0% for period ended TTM vis-vis 40.0% for period ended Mar 2021, contraction of 600.0 bps.
Net Profit reported at Rs -0.0 cr for period ended TTM vis-vis sales of Rs 129.0 cr for the period ended Mar 2021, falling 0%.
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 worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 5.0% compared to 12.0% over the last 3 Years. – The stock has given a return of -45% on a 1 Year basis vis-vis a return of % over the last 3 Years. – The compounded sales growth on a TTM bassis is 11% vis-vis a compounded sales growth of 35% over the last 3 Years. – The compounded profit growth on a TTM basis is -100% vis-vis a compounded profit growth of -12% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Sep 2021 fii holding stood at 12.43% vis-vis 10.98% for Jun 2021 – Public shareholding has remained largely constant. The Sep 2021 public holding stood at 20.74% vis-vis 22.08% for Jun 2021
Conclusion
– Stock is trading at 0.98 times its book value – Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
– has a low return on equity of 11.83% for last 3 years.
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 473.21 and is trading at 415.0. 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
