Mehabe score: 7 G Factor: 2 Piotski Score: 4 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 4. Site:DRCSYSTEMS Main Symbol:DRCSYSTEMS
Stock trades at 389.0, above its 50dma 312.1. It also trades above its 200dma 274.19. The stock remains bullish on techicals
The 52 week high is at 441.00 and the 52week low is at 141.90
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
Weakness
– has low interest coverage ratio.
-Promoter holding has decreased over last quarter: -2.92%
-Promoter holding is low: 25.63%
Competition
– The industry trades at a mean P/E of 38.7x. Tata Elxsi trades at the industry’s max P/E of 86.38x. DRCSYSTEMS trades at a P/E of x
– Industry’s mean G-Factor is 3.2 while the mean Piotski score is 9.0. DRCSYSTEMS has a G-Factor of 2 and Piotski scoreof 4.
– Average 1 month return for industry is 10.6%. The max 1- month return was given by DRC Systems: a return of 46.77 %
Quarterly Results
Sales for period ended Dec 2021 is Rs 4.29 cr compared to Rs 4.82 cr for period ended Dec 2020, a fall of 11.0%
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Company reported operating profit of Rs 0.57 cr for period ended Dec 2021 and operating profit margin at 13.3 % for same periodOperating profit was negative for the same period last year. Company has improved its margins this year.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 21.22 cr for period ended TTM vis-vis sales of Rs 20.59 cr for the period ended Mar 2021, a growth of 3.0%. The 3 year sales cagr stood at 30.3%.
Operating margins expanded to 13.85% for period ended TTM vis-vis 7.48% for period ended Mar 2021, expansion of 637.0 bps.
Net Profit reported at Rs 0.97 cr for period ended TTM vis-vis sales of Rs -0.48 cr for the period ended Mar 2021, rising 149.5%.
Company recorded a healthy Net Profit CAGR of 120.9% 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 0.83 cr for period ended Mar 2021 vis-vis Rs -0.16 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 -12.0% compared to 0% over the last 3 Years. – The stock has given a return of % on a 1 Year basis vis-vis a return of % over the last 3 Years. – The compounded sales growth on a TTM bassis is 89% vis-vis a compounded sales growth of % over the last 3 Years. – The compounded profit growth on a TTM basis is -4900% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Dec 2021 fii holding stood at 1.52% vis-vis 1.91% for Sep 2021 – Public shareholding has risen for the period ended Dec 2021. The Dec 2021 public holding stood at 72.85% vis-vis 69.55% for Sep 2021
Conclusion
– is almost debt free. – has low interest coverage ratio.
-Promoter holding has decreased over last quarter: -2.92%
-Promoter holding is low: 25.63%
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 312.1 and is trading at 389.0 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
