Mehabe score: 2 G Factor: 2 Piotski Score: 8 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 2 and Piotski score of 8.
Description
The company is engaged in footwear and accessories manufacturing and distribution headquartered in Kolkata. #
There are 35 Dealer Showrooms, apart from its own 5 Showrooms, all over the Country. #
Main Points
Products and Brands
The company has a product line bifurcated into;
Men & Women- shoes, sandals, chappals, and nagras
Kids- shoes, chappal, sandals
– belt, wallet, bags, special boxes, socks, and masks #Site:SREEL
Market Cap:
Rs 481 cr
Price:
207.0
Trading pe:
39.8x
Book-value:
144/share
Div yield:
0.00 %
Earning yield:
3.44%
Face-value:
10.0/share
52week high:
238.00
52week low:
116.05
Technical Analysis
Stock trades at 207.0, above its 50dma 177.27. It also trades above its 200dma 154.75. The stock remains bullish on techicals
The 52 week high is at 238.00 and the 52week low is at 116.05
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is almost debt free.
– has delivered good profit growth of 31.23% CAGR over last 5 years
-Promoter holding has increased by 3.48% over last quarter.
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
– has a low return on equity of 9.13% for last 3 years.
Competition
– The industry trades at a mean P/E of 43.3x. Liberty Shoes trades at the industry’s max P/E of 938.29x. SREEL trades at a P/E of 39.8x
– Industry’s mean G-Factor is 3.4 while the mean Piotski score is 8.0. SREEL has a G-Factor of 2 and Piotski scoreof 8.
– Average 1 month return for industry is 26.2%. The max 1- month return was given by Khadim India: a return of 115.67 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 33.65 cr compared to Rs 34.91 cr for period ended Mar 2020, a fall of 3.6%
Operating Profits reported at Rs 6.89 cr for period ended Mar 2021 vis-vis 7.64 for period ended Mar 2020 .
Operating Margins contracted -140.9 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 1.99 compared to Rs 2.13 for previous quarter ended Dec 2020 and Rs 2.21 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 83.0 cr for period ended Mar 2021 vis-vis sales of Rs 173.0 cr for the period ended Mar 2020, a fall of 108.4%. The 3 year sales cagr stood at -16.2%.
Operating margins shrank to 20.0% for period ended Mar 2021 vis-vis 23.0% for period ended Mar 2020, contraction of 300.0 bps.
Net Profit reported at Rs 11.0 cr for period ended Mar 2021 vis-vis sales of Rs 29.0 cr for the period ended Mar 2020, falling 163.6%.
Company reported a poor Net Profit CAGR of -19.4% over the last 3 years
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 had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 9.0% compared to 9.0% over the last 3 Years. – The stock has given a return of 67% 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 -52% vis-vis a compounded sales growth of 20% over the last 3 Years. – The compounded profit growth on a TTM basis is -56% vis-vis a compounded profit growth of 31% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 3.32% vis-vis 3.16% for Dec 2020 – Public shareholding has fallen for the period ended Mar 2021. The Mar 2021 public holding stood at 24.31% vis-vis 27.96% for Dec 2020
Conclusion
– has reduced debt.
– is almost debt free.
– has delivered good profit growth of 31.23% CAGR over last 5 years
-Promoter holding has increased by 3.48% over last quarter. – Though the company is reporting repeated profits, it is not paying out dividend
– has a low return on equity of 9.13% for 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 177.27 and is trading at 207.0 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
