Mehabe score: 6 G Factor: 2 Piotski Score: 3 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 2 and Piotski score of 3.
Description
Alicon Castalloy manufactures aluminium castings including cylinder heads, support brackets, intake manifolds, crankshafts, and engine brackets for the auto industry. It has a presence in 18 countries and is a part of Alicon Group.
The co. was established as Enkei Castalloy Ltd, a joint venture between Pegasus Castalloy Ltd and Enkei Corporation (now Alicon Castalloy), in Japan; one of the largest manufacturers of alloy wheels in the world.Site:ALICONMain Symbol:ALICON
Stock trades at 784.0, above its 50dma 770.81. It also trades above its 200dma 604.89. The stock remains bullish on techicals
The 52 week high is at 949.00 and the 52week low is at 282.15
Price Chart
P/E Chart
Sales and Margin
Strengths
– is expected to give good quarter
Weakness
– Stock is trading at 3.99 times its book value
-Promoter holding has decreased over last quarter: -6.07%
-The company has delivered a poor sales growth of 2.53% over past five years.
– has a low return on equity of 7.44% for last 3 years.
Competition
– The industry trades at a mean P/E of 23.3x. WABCO India trades at the industry’s max P/E of 99.95x. ALICON trades at a P/E of 33.4x
– Industry’s mean G-Factor is 2.8 while the mean Piotski score is 7.0. ALICON has a G-Factor of 2 and Piotski scoreof 3.
– Average 1 month return for industry is 0.4%. The max 1- month return was given by WABCO India: a return of 10.72 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 210.75 cr compared to Rs 52.98 cr for period ended Jun 2020, a rise of 297.8%
Company reported operating profit of Rs 17.1 cr for period ended Jun 2021, operating profit margin at 8.1 %.
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 -2.7 compared to Rs 18.21 for previous quarter ended Mar 2021 and Rs -31.93 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1006.0 cr for period ended TTM vis-vis sales of Rs 849.0 cr for the period ended Mar 2021, a healthy growth of 15.6%. The 3 year sales cagr stood at -5.4%.
Operating margins expanded to 12.0% for period ended TTM vis-vis 10.0% for period ended Mar 2021, expansion of 200.0 bps.
Net Profit reported at Rs 38.0 cr for period ended TTM vis-vis sales of Rs -2.0 cr for the period ended Mar 2021, rising 105.3%.
Company reported a poor Net Profit CAGR of -10.5% 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 112.0 cr for period ended Mar 2021 vis-vis Rs 57.0 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 worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -1.0% compared to 7.0% over the last 3 Years. – The stock has given a return of 155% 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 35% vis-vis a compounded sales growth of -6% over the last 3 Years. – The compounded profit growth on a TTM basis is 218% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Sep 2021 fii holding stood at 0.0% vis-vis 0.02% for Jun 2021 – Public shareholding has fallen for the period ended Sep 2021. The Sep 2021 public holding stood at 34.84% vis-vis 38.03% for Jun 2021
Conclusion
– is expected to give good quarter – Stock is trading at 3.99 times its book value
-Promoter holding has decreased over last quarter: -6.07%
-The company has delivered a poor sales growth of 2.53% over past five years.
– has a low return on equity of 7.44% for last 3 years.
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 770.81 and is trading at 784.0 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
