Mehabe score: 3 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
Cambridge Technology Enterprises the parent’ and its subsidiaries (collectively referred to as ‘the Group’) are primarily a global technology services and outsourcing Group dedicated to serving the midsize market enterprises and the midsize units of Global 2000 enterprises across the spectrum of business industries.Site:CTEMain Symbol:CTE
Stock trades at 89.3, above its 50dma 53.26. It also trades above its 200dma 38.43. The stock remains bullish on techicals
The 52 week high is at 94.10 and the 52week low is at 15.60
Price Chart
P/E Chart
Sales and Margin
Strengths
– Debtor days have improved from 145.23 to 104.40 days.
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of 10.71% over past five years.
-Tax rate seems low
-Earnings include an other income of Rs.6.91 Cr.
Competition
– The industry trades at a mean P/E of 35.7x. Happiest Minds trades at the industry’s max P/E of 131.5x. CTE trades at a P/E of 19.9x
– Industry’s mean G-Factor is 3.4 while the mean Piotski score is 9.0. CTE has a G-Factor of 3 and Piotski scoreof 7.
– Average 1 month return for industry is 28.9%. The max 1- month return was given by Cambridge Tech.: a return of 126.36 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 24.84 cr compared to Rs 21.81 cr for period ended Jun 2020, a rise of 13.9%
Operating Profits reported at Rs 3.84 cr for period ended Jun 2021 vis-vis 4.35 for period ended Jun 2020 .
Operating Margins contracted -448.6 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 1.15 compared to Rs 6.14 for previous quarter ended Mar 2021 and Rs 1.23 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 112.0 cr for period ended TTM vis-vis sales of Rs 109.0 cr for the period ended Mar 2021, a growth of 2.7%. The 3 year sales cagr stood at 2.8%.
Operating margins shrank to 9.0% for period ended TTM vis-vis 10.0% for period ended Mar 2021, contraction of 100.0 bps.
Net Profit reported at Rs 9.0 cr for period ended TTM vis-vis sales of Rs 9.0 cr for the period ended Mar 2021,
Company reported a poor Net Profit CAGR of -22.0% 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 12.0% compared to 16.0% over the last 3 Years. – The stock has given a return of 446% on a 1 Year basis vis-vis a return of 21% over the last 3 Years. – The compounded sales growth on a TTM bassis is 4% vis-vis a compounded sales growth of 3% over the last 3 Years. – The compounded profit growth on a TTM basis is 84% vis-vis a compounded profit growth of -5% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Jun 2021 public holding stood at 50.3% vis-vis 50.3% for Mar 2021
Conclusion
– Debtor days have improved from 145.23 to 104.40 days. – Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of 10.71% over past five years.
-Tax rate seems low
-Earnings include an other income of Rs.6.91 Cr.
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 53.26 and is trading at 89.3 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
