Mehabe score: 3 G Factor: 2 Piotski Score: 6 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 6.
Description
Aarti Surfactants manufactures surfactants and specialty products, serving Home & Personal Care, Industrial Applications, Agro and Oil industries in India and overseas. Aarti Surfactants Limited has been a result of the demerger of the Home and Personal Care division of Aarti Industries Limited. The Company manufactures over 30 innovative and eco‐friendly surfactants and also creates custom surfactants. It got listed in 2020. They have Manufacturing plants located at Pithampur (Madhya Pradesh) and Silvassa. Site:AARTISURF Main Symbol:AARTISURF
Stock trades at 991.0, below its 50dma 1064.89 and below its 200dma 1180.31. The stock remains bearish on technicals
The 52 week high is at 1887.00 and the 52week low is at 833.00
Price Chart
P/E Chart
Sales and Margin
Strengths
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Weakness
– Promoter holding has decreased over last quarter: -2.24%
– might be capitalizing the interest cost
-Debtor days have increased from 31.36 to 42.65 days.
Competition
– The industry trades at a mean P/E of 28.2x. Clean Science trades at the industry’s max P/E of 123.21x. AARTISURF trades at a P/E of 47.5x
– Industry’s mean G-Factor is 2.6 while the mean Piotski score is 8.0. AARTISURF has a G-Factor of 2 and Piotski scoreof 6.
– Average 1 month return for industry is -0.1%. The max 1- month return was given by Gujarat Fluoroch: a return of 19.7 %
Quarterly Results
Sales for period ended Sep 2021 is Rs 139.82 cr compared to Rs 111.89 cr for period ended Sep 2020, a rise of 25.0% .
vis-vis 11.97 for period ended Sep 2020 .
Operating Margins contracted -527.7 bps for period ended Sep 2021 vis-vis Sep 2020.
Company reported operating profit of Rs 7.58 cr for period ended Sep 2021 and operating profit margin at 5.4 % for same period.
The EPS for quarter ended Sep 2021 is Rs 1.09 compared to Rs 5.96 for previous quarter ended Jun 2021 and Rs 8.69 for Sep 2020.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 522.0 cr for period ended TTM vis-vis sales of Rs 466.0 cr for the period ended Mar 2021, a healthy growth of 10.7%.
Operating margins shrank to 8.0% for period ended TTM vis-vis 10.0% for period ended Mar 2021, contraction of 200.0 bps.
Net Profit reported at Rs 16.0 cr for period ended TTM vis-vis sales of Rs 22.0 cr for the period ended Mar 2021, falling 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 36.0 cr for period ended Mar 2021 vis-vis Rs 18.0 cr for period ended Mar 2020
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 15.0% compared to 0% over the last 3 Years. – The stock has given a return of 10% on a 1 Year basis vis-vis a return of % over the last 3 Years. – The compounded sales growth on a TTM bassis is 43% vis-vis a compounded sales growth of % over the last 3 Years. – The compounded profit growth on a TTM basis is 935% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Dec 2021 fii holding stood at 1.0% vis-vis 1.55% for Sep 2021 – Public shareholding has risen for the period ended Dec 2021. The Dec 2021 public holding stood at 53.66% vis-vis 50.87% for Sep 2021
Conclusion
– – Promoter holding has decreased over last quarter: -2.24%
– might be capitalizing the interest cost
-Debtor days have increased from 31.36 to 42.65 days.
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 1064.89 and is trading at 991.0. 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
