Investment Memo: BIRLAMONEY

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Our Rating: OBSERVE & HOLD

Mehabe score: 4
G Factor: 3
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 3 and Piotski score of 5.

Description

Aditya Birla Money Limited, a subsidiary of Aditya Birla Capital Limited, is engaged in offering equity and derivatives broking services as well as Portfolio Management Services [1]
Site: BIRLAMONEY
Main Symbol: BIRLAMONEY

Price Chart

Market Cap: Rs 422 cr Price: 75.0 Trading pe: 21.2x
Book-value: 10.7/share Div yield: 0.00 % Earning yield: 12.71%
Face-value: 1.00/share 52week high: 88.80 52week low: 38.00

Technical Analysis

  • Stock trades at 75.0, above its 50dma 64.3. It also trades above its 200dma 59.13. The stock remains bullish on techicals
  • The 52 week high is at 88.80 and the 52week low is at 38.00

Price Chart

P/E Chart

Sales and Margin

Strengths

– has delivered good profit growth of 69.41% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 36.17%

Weakness

– Stock is trading at 7.02 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of 10.37% over past five years.
– might be capitalizing the interest cost
– has high debtors of 291.99 days.

Competition

– The industry trades at a mean P/E of 11.5x. DB Intl.Stock trades at the industry’s max P/E of 72.36x. BIRLAMONEY trades at a P/E of 21.2x
– Industry’s mean G-Factor is 3.9 while the mean Piotski score is 8.0. BIRLAMONEY has a G-Factor of 3 and Piotski scoreof 5.
– Average 1 month return for industry is 44.0%. The max 1- month return was given by DB Intl.Stock: a return of 140.91 %

Quarterly Results

  • Sales for period ended Dec 2021 is Rs 60.27 cr compared to Rs 48.79 cr for period ended Dec 2020, a rise of 23.5% .
  • vis-vis 12.86 for period ended Dec 2020 .

  • Operating Margins expanded 209.7 bps for period ended Dec 2021 vis-vis Dec 2020.
  • Company reported operating profit of Rs 17.15 cr for period ended Dec 2021 and operating profit margin at 28.5 % for same period.
  • The EPS for quarter ended Dec 2021 is Rs 1.15 compared to Rs 1.14 for previous quarter ended Sep 2021 and Rs 0.75 for Dec 2020.

Profit & Loss Statement

Profit&Loss Comments

  • Company reported sales of Rs 220.0 cr for period ended TTM vis-vis sales of Rs 192.0 cr for the period ended Mar 2021, a healthy growth of 12.7%. The 3 year sales cagr stood at 8.6%.
  • Net Profit reported at Rs 22.0 cr for period ended TTM vis-vis sales of Rs 16.0 cr for the period ended Mar 2021, rising 27.3%.
  • Company recorded a healthy Net Profit CAGR of 30.1% 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 40.0% compared to 36.0% over the last 3 Years.
    – The stock has given a return of 48% on a 1 Year basis vis-vis a return of 12% over the last 3 Years.
    – The compounded sales growth on a TTM bassis is 18% vis-vis a compounded sales growth of 6% over the last 3 Years.
    – The compounded profit growth on a TTM basis is 48% vis-vis a compounded profit growth of 30% over the last 3 Years.

    Ratios

    Shareholding Pattern

    – FII shareholding has remained largely constant. The Dec 2021 fii holding stood at 0.19% vis-vis 0.01% for Sep 2021
    – Public shareholding has remained largely constant. The Dec 2021 public holding stood at 26.11% vis-vis 26.29% for Sep 2021

    Conclusion

    – has delivered good profit growth of 69.41% CAGR over last 5 years
    – has a good return on equity (ROE) track record: 3 Years ROE 36.17% – Stock is trading at 7.02 times its book value
    -Though the company is reporting repeated profits, it is not paying out dividend
    -The company has delivered a poor sales growth of 10.37% over past five years.
    – might be capitalizing the interest cost
    – has high debtors of 291.99 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 64.3 and is trading at 75.0 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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