Mehabe score: 5 G Factor: 3 Piotski Score: 4 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 4.
Description
Sutlej Textiles & Industries is engaged in deals in cotton and man-made fibres yarn and home textiles.Site:SUTLEJTEXMain Symbol:SUTLEJTEX
Stock trades at 67.6, above its 50dma 63.02. It also trades above its 200dma 47.91. The stock remains bullish on techicals
The 52 week high is at 81.20 and the 52week low is at 18.40
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 1.16 times its book value
– is expected to give good quarter
Weakness
– has a low return on equity of 2.93% for last 3 years.
– might be capitalizing the interest cost
Competition
– The industry trades at a mean P/E of 15.6x. RSWM Ltd trades at the industry’s max P/E of 45.41x. SUTLEJTEX trades at a P/E of 20.2x
– Industry’s mean G-Factor is 3.6 while the mean Piotski score is 8.0. SUTLEJTEX has a G-Factor of 3 and Piotski scoreof 4.
– Average 1 month return for industry is 29.7%. The max 1- month return was given by Nitin Spinners: a return of 47.69 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 587.0 cr compared to Rs 192.0 cr for period ended Jun 2020, a rise of 205.7%
Company reported operating profit of Rs 72.0 cr for period ended Jun 2021, operating profit margin at 12.3 %.
Operating profit was negative for the same period last year thus company has improved its margins this year
The EPS for Jun 2021 was Rs 1.24 compared to Rs 1.7 for previous quarter ended Mar 2021 and Rs -2.33 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 2279.0 cr for period ended TTM vis-vis sales of Rs 1884.0 cr for the period ended Mar 2021, a healthy growth of 17.3%. The 3 year sales cagr stood at -4.5%.
Operating margins expanded to 9.0% for period ended TTM vis-vis 6.0% for period ended Mar 2021, expansion of 300.0 bps.
Net Profit reported at Rs 55.0 cr for period ended TTM vis-vis sales of Rs -4.0 cr for the period ended Mar 2021, rising 107.3%.
Company reported a poor Net Profit CAGR of -1.8% 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 258% on a 1 Year basis vis-vis a return of 8% over the last 3 Years. – The compounded sales growth on a TTM bassis is 17% vis-vis a compounded sales growth of -9% over the last 3 Years. – The compounded profit growth on a TTM basis is 504% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 0.02% vis-vis 0.0% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 36.06% vis-vis 36.08% for Mar 2021
Conclusion
– Stock is trading at 1.16 times its book value
– is expected to give good quarter – has a low return on equity of 2.93% for last 3 years.
– might be capitalizing the interest cost
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 63.02 and is trading at 67.6 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
