Mehabe score: 5 G Factor: 3 Piotski Score: 7 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 7.
Description
WABCO India is a subsidiary of WABCO Holding Inc, USA. The Company is engaged in the business of manufacturing and marketing conventional braking products, advanced braking systems, and other related air-assisted products and systems. It also provides software development and other services. Its headquarter is in Chennai, India#
Main Points
Brand
It is the market leader for advanced braking systems, conventional braking products, and related air-assisted technologies and systems in India. #
It has a strong customer base, some of which are TATA, Ashok Leyland, Audi, and some more.Site:WABCOINDIAMain Symbol:WABCOINDIA
Stock trades at 7176.0, above its 50dma 6989.22. It also trades above its 200dma 6480.32. The stock remains bullish on techicals
The 52 week high is at 7871.95 and the 52week low is at 4750.05
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
Weakness
– Stock is trading at 6.82 times its book value
-The company has delivered a poor sales growth of 0.34% over past five years.
– has a low return on equity of 9.25% for last 3 years.
-Dividend payout has been low at 12.69% of profits over last 3 years
-Debtor days have increased from 88.17 to 114.67 days.
Competition
– The industry trades at a mean P/E of 32.4x. WABCO India trades at the industry’s max P/E of 131.07x. WABCOINDIA trades at a P/E of 131.0x
– Industry’s mean G-Factor is 4.0 while the mean Piotski score is 7.0. WABCOINDIA has a G-Factor of 3 and Piotski scoreof 7.
– Average 1 month return for industry is 1.1%. The max 1- month return was given by Minda Industries: a return of 11.19 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 492.0 cr compared to Rs 166.0 cr for period ended Jun 2020, a rise of 196.4%
Company reported operating profit of Rs 42.0 cr for period ended Jun 2021, operating profit margin at 8.5 %.
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 11.27 compared to Rs 25.11 for previous quarter ended Mar 2021 and Rs -16.53 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 2189.0 cr for period ended TTM vis-vis sales of Rs 1864.0 cr for the period ended Mar 2021, a healthy growth of 14.8%. The 3 year sales cagr stood at -8.5%.
Operating margins expanded to 13.0% for period ended TTM vis-vis 11.0% for period ended Mar 2021, expansion of 200.0 bps.
Net Profit reported at Rs 157.0 cr for period ended TTM vis-vis sales of Rs 104.0 cr for the period ended Mar 2021, rising 33.8%.
Company reported a poor Net Profit CAGR of -17.7% 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 company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 5.0% compared to 9.0% over the last 3 Years. – The stock has given a return of 3% on a 1 Year basis vis-vis a return of 2% over the last 3 Years. – The compounded sales growth on a TTM bassis is -3% vis-vis a compounded sales growth of -10% over the last 3 Years. – The compounded profit growth on a TTM basis is -24% vis-vis a compounded profit growth of -26% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 0.62% vis-vis 0.35% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 8.33% vis-vis 7.99% for Mar 2021
Conclusion
– is almost debt free. – Stock is trading at 6.82 times its book value
-The company has delivered a poor sales growth of 0.34% over past five years.
– has a low return on equity of 9.25% for last 3 years.
-Dividend payout has been low at 12.69% of profits over last 3 years
-Debtor days have increased from 88.17 to 114.67 days.
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 6989.22 and is trading at 7176.0 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
