Investment Memo: DCMNVL

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Our Rating: HOLD

Mehabe score: 6
G Factor: 5
Piotski Score: 7
The stock has a rating 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 5 and Piotski score of 7.

Description

Established in 1991, DCM commenced its spinning operations at its manufacturing plant in Hisar. DCM Nouvelle is leading manufacturer & exporter of 100% cotton carded and combed yarns .
Site: DCMNVL
Main Symbol: DCMNVL

Price Chart

Technical Analysis

• Stock trades at 386.0, above its 50dma 293.01. It also trades above its 200dma 212.55. The stock remains bullish on techicals
• The 52 week high is at 386.10 and the 52week low is at 61.00

Price Chart

P/E Chart

Sales and Margin

Strengths

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

Weakness

– Stock is trading at 2.83 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
– might be capitalizing the interest cost
-Debtor days have increased from 43.97 to 60.36 days.

Competition

– The industry trades at a mean P/E of 10.3x. Arvind Ltd trades at the industry’s max P/E of 25.72x. DCMNVL trades at a P/E of 6.71x
– Industry’s mean G-Factor is 4.1 while the mean Piotski score is 8.0. DCMNVL has a G-Factor of 5 and Piotski scoreof 7.
– Average 1 month return for industry is 17.2%. The max 1- month return was given by DCM Nouvelle: a return of 38.83 %

Quarterly Results

• Sales for period ended Dec 2021 is Rs 231.0 cr compared to Rs 152.0 cr for period ended Dec 2020, a rise of 52.0% .

vis-vis 21.0 for period ended Dec 2020 .

• Operating Margins expanded 479.9 bps for period ended Dec 2021 vis-vis Dec 2020.
• Company reported operating profit of Rs 43.0 cr for period ended Dec 2021 and operating profit margin at 18.6 % for same period.
• The EPS for quarter ended Dec 2021 is Rs 16.51 compared to Rs 22.16 for previous quarter ended Sep 2021 and Rs 6.56 for Dec 2020.

Profit & Loss Statement

Profit&Loss Comments

• Company reported sales of Rs 847.0 cr for period ended TTM vis-vis sales of Rs 563.0 cr for the period ended Mar 2021, a healthy growth of 33.5%. The 3 year sales cagr stood at 8.2%.
• Operating margins expanded to 21.0% for period ended TTM vis-vis 11.0% for period ended Mar 2021, expansion of 1000.0 bps.
• Net Profit reported at Rs 126.0 cr for period ended TTM vis-vis sales of Rs 31.0 cr for the period ended Mar 2021, rising 75.4%.
• Company recorded a healthy Net Profit CAGR of 47.8% 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 had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 18.0% compared to 19.0% over the last 3 Years.
– The stock has given a return of 463% on a 1 Year basis vis-vis a return of % over the last 3 Years.
– The compounded sales growth on a TTM bassis is 49% vis-vis a compounded sales growth of % over the last 3 Years.
– The compounded profit growth on a TTM basis is 9604% vis-vis a compounded profit growth of 1351% over the last 3 Years.

Ratios

Shareholding Pattern

– FII shareholding has remained largely constant. The Dec 2021 fii holding stood at 0.89% vis-vis 0.21% for Sep 2021
– Public shareholding has remained largely constant. The Dec 2021 public holding stood at 42.5% vis-vis 43.11% for Sep 2021

Conclusion

– has reduced debt.
– is expected to give good quarter – Stock is trading at 2.83 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
– might be capitalizing the interest cost
-Debtor days have increased from 43.97 to 60.36 days.

• The business fundamentals of the stock remain stable. Stronger near term results will build interest in the stock. We suggest to wait for a upturn in business performance.
• Technically, the stock remains above its 50 DMA 293.01 and is trading at 386.0, thus bullish price action wise.
• Thus, overall we retain a HOLD on the stock.

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