Home Investment Memo: AJMERA

Investment Memo: AJMERA

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Our Rating: OBSERVE & HOLD

Mehabe score: 5
G Factor: 1
Piotski Score: 5
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 1 and Piotski score of 5.

Description

Ajmera Realty & Infra India is engaged in real estate businessSite: AJMERAMain Symbol: AJMERA

Price Chart

Market Cap: Rs 1,139 cr Price: 321.0 Trading pe: 37.7x
Book-value: 189/share Div yield: 0.44 % Earning yield: 5.45%
Face-value: 10.0/share 52week high: 324.90 52week low: 75.20

Technical Analysis

  • Stock trades at 321.0, above its 50dma 244.26. It also trades above its 200dma 163.18. The stock remains bullish on techicals
  • The 52 week high is at 324.90 and the 52week low is at 75.20

Price Chart

P/E Chart

Sales and Margin

Strengths

– has reduced debt.
– is expected to give good quarter

Weakness

– has low interest coverage ratio.
-The company has delivered a poor sales growth of 1.87% over past five years.
– has a low return on equity of 7.40% for last 3 years.
– might be capitalizing the interest cost
– has high debtors of 188.77 days.

Competition

– The industry trades at a mean P/E of 39.6x. Phoenix Mills trades at the industry’s max P/E of 293.33x. AJMERA trades at a P/E of 37.7x
– Industry’s mean G-Factor is 3.0 while the mean Piotski score is 7.0. AJMERA has a G-Factor of 1 and Piotski scoreof 5.
– Average 1 month return for industry is 12.9%. The max 1- month return was given by Prestige Estates: a return of 27.93 %

Quarterly Results

  • Sales for period ended Jun 2021 is Rs 135.0 cr compared to Rs 40.0 cr for period ended Jun 2020, a rise of 237.5%
  • Operating Profits reported at Rs 33.0 cr for period ended Jun 2021 vis-vis 13.0 for period ended Jun 2020 .
  • Operating Margins contracted -805.6 bps for period ended Jun 2021 vis-vis Jun 2020 .
  • The EPS for Jun 2021 was Rs 2.89 compared to Rs 3.52 for previous quarter ended Mar 2021 and Rs 0.59 for Jun 2020

Profit & Loss Statement

Profit&Loss Comments

  • Company reported sales of Rs 442.0 cr for period ended TTM vis-vis sales of Rs 347.0 cr for the period ended Mar 2021, a healthy growth of 21.5%. The 3 year sales cagr stood at 5.0%.
  • Operating margins shrank to 26.0% for period ended TTM vis-vis 28.0% for period ended Mar 2021, contraction of 200.0 bps.
  • Net Profit reported at Rs 38.0 cr for period ended TTM vis-vis sales of Rs 30.0 cr for the period ended Mar 2021, rising 21.1%.
  • Company reported a poor Net Profit CAGR of -20.3% over the last 3 years

Balance Sheet Statement

Cash Flow Statement

Cash Flow comments

  • CashFlow from operating activities was positive.
  • CashFlow from operating activities: Rs 196.0 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 had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 5.0% compared to 7.0% over the last 3 Years.
– The stock has given a return of 330% on a 1 Year basis vis-vis a return of 16% over the last 3 Years.
– The compounded sales growth on a TTM bassis is 1% vis-vis a compounded sales growth of -2% over the last 3 Years.
– The compounded profit growth on a TTM basis is -8% vis-vis a compounded profit growth of -28% over the last 3 Years.

Ratios

Shareholding Pattern

– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 0.08% vis-vis 0.0% for Mar 2021
– Public shareholding has remained largely constant. The Jun 2021 public holding stood at 30.18% vis-vis 30.26% for Mar 2021

Conclusion

– has reduced debt.
– is expected to give good quarter – has low interest coverage ratio.
-The company has delivered a poor sales growth of 1.87% over past five years.
– has a low return on equity of 7.40% for last 3 years.
– might be capitalizing the interest cost
– has high debtors of 188.77 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 244.26 and is trading at 321.0 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
  • Thus, overall, we retain a OBSERVE & HOLD.

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