Investment Memo: TIPSINDLTD

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Our Rating: HOLD

Mehabe score: 5
G Factor: 4
Piotski Score: 7
The stock has a rating 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 4 and Piotski score of 7.

Description

Tips Industries is engaged in Music (Audio/ Video) and Film Production/ distribution.Site: TIPSINDLTD

Technical Analysis

• Stock trades at 933.0, above its 50dma 747.87. It also trades above its 200dma 472.09. The stock remains bullish on techicals
• The 52 week high is at 1064.00 and the 52week low is at 105.00

Price Chart

P/E Chart

Sales and Margin

Strengths

– has reduced debt.
– is almost debt free.
– has delivered good profit growth of 31.95% CAGR over last 5 years
– has been maintaining a healthy dividend payout of 38.31%

Weakness

– Stock is trading at 17.14 times its book value
– has a low return on equity of 7.37% for last 3 years.
-Debtor days have increased from 53.62 to 72.77 days.

Competition

– The industry trades at a mean P/E of 21.8x. Tips Industries trades at the industry’s max P/E of 47.26x. TIPSINDLTD trades at a P/E of 47.3x
– Industry’s mean G-Factor is 3.5 while the mean Piotski score is 8.0. TIPSINDLTD has a G-Factor of 4 and Piotski scoreof 7.
– Average 1 month return for industry is 17.4%. The max 1- month return was given by Saregama India: a return of 28.06 %

Quarterly Results

• Sales for period ended Mar 2021 is Rs 28.0 cr compared to Rs 19.0 cr for period ended Mar 2020, a rise of 47.4%
• Operating Profits reported at Rs 19.0 cr for period ended Mar 2021 vis-vis 1.0 for period ended Mar 2020 .
• Operating Margins expanded 6259.4 bps for period ended Mar 2021 vis-vis Mar 2020 .
• The EPS for Mar 2021 was Rs 14.09 compared to Rs 9.55 for previous quarter ended Dec 2020 and Rs 0.25 for Mar 2020

Profit & Loss Statement

Profit&Loss Comments

• Company reported sales of Rs 91.0 cr for period ended Mar 2021 vis-vis sales of Rs 91.0 cr for the period ended Mar 2020, The 3 year sales cagr stood at 24.6%.
• Operating margins expanded to 61.0% for period ended Mar 2021 vis-vis -2.0% for period ended Mar 2020, expansion of 6300.0 bps.
• Net Profit reported at Rs 43.0 cr for period ended Mar 2021 vis-vis sales of Rs 11.0 cr for the period ended Mar 2020, rising 74.4%.
• Company recorded a healthy Net Profit CAGR of 142.9% 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 improved its Return on Equity (RoE) metric. The RoE on Last Year basis was 14.0% compared to 7.0% over the last 3 Years.
– The stock has given a return of 716% on a 1 Year basis vis-vis a return of 91% over the last 3 Years.
– The compounded sales growth on a TTM bassis is -17% vis-vis a compounded sales growth of 25% over the last 3 Years.
– The compounded profit growth on a TTM basis is 116% vis-vis a compounded profit growth of 54% over the last 3 Years.

Ratios

Shareholding Pattern

– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 0.77% vis-vis 0.35% for Dec 2020
– Public shareholding has remained largely constant. The Mar 2021 public holding stood at 24.25% vis-vis 24.68% for Dec 2020

Conclusion

– has reduced debt.
– is almost debt free.
– has delivered good profit growth of 31.95% CAGR over last 5 years
– has been maintaining a healthy dividend payout of 38.31% – Stock is trading at 17.14 times its book value
– has a low return on equity of 7.37% for last 3 years.
-Debtor days have increased from 53.62 to 72.77 days.

• The business fundamentals of the stock remain stable. Stronger near term results will build interest in the stock. We suggest to wait for a upturn in business performance.
• Technically, the stock remains above its 50 DMA 747.87 and is trading at 933.0, thus bullish price action wise.
• Thus, overall we retain a HOLD on the stock.

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