Mehabe score: 2 G Factor: 4 Piotski Score: 3 The stock has a rating SELL. 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 4 and Piotski score of 3.
Description
Earum Pharmaceuticals is engaged in the pharmaceutical business involving marketing, trading and distribution of wide range of pharmaceutical formulation products such as anti-biotic drugs, anti-malarial drugs, anti-allergic & anti cold drugs, analgesic/ anti-pyretic & anti inflammatory drugs, dermatology products, cerebral activator drugs, neurological drugs, gastro intestinal drugs, steroids, gynecology drugs, calcium, multivitamins, antioxidants and injections. Site:EARUM Main Symbol:EARUM
Stock trades at 7.1, below its 50dma 7.17 and below its 200dma 9.89. The stock remains bearish on technicals
The 52 week high is at 26.40 and the 52week low is at 4.75
Price Chart
P/E Chart
Sales and Margin
Strengths
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Weakness
– Stock is trading at 3.02 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-Promoter holding has decreased over last quarter: -19.83%
-The company has delivered a poor sales growth of -2.05% over past five years.
– has a low return on equity of 10.55% for last 3 years.
– might be capitalizing the interest cost
-Earnings include an other income of Rs.7.70 Cr.
– has high debtors of 185.10 days.
Competition
– The industry trades at a mean P/E of 27.8x. Biocon trades at the industry’s max P/E of 58.74x. EARUM trades at a P/E of 19.7x
– Industry’s mean G-Factor is 1.9 while the mean Piotski score is 9.0. EARUM has a G-Factor of 4 and Piotski scoreof 3.
– Average 1 month return for industry is 3.3%. The max 1- month return was given by Earum Pharmaceu.: a return of 19.93 %
Quarterly Results
Sales for period ended Mar 2022 is Rs 4.74 cr compared to Rs 9.11 cr for period ended Mar 2021, a fall of 48.0%
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Company reported negative operating profit of Rs -5.28 cr for period ended Mar 2022. For same period last year, operating profit was -1.33.
The EPS for quarter ended Mar 2022 is Rs -0.12 compared to Rs 0.15 for previous quarter ended Dec 2021 and Rs -0.16 for Mar 2021.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 21.04 cr for period ended Mar 2022 vis-vis sales of Rs 41.08 cr for the period ended Mar 2021, a fall of 95.2%. The 3 year sales cagr stood at -25.4%.
Operating margins shrank to -21.01% for period ended Mar 2022 vis-vis -18.89% for period ended Mar 2021, contraction of 212.0 bps.
Net Profit reported at Rs 2.22 cr for period ended Mar 2022 vis-vis sales of Rs 0.09 cr for the period ended Mar 2021, rising 95.9%.
Company recorded a healthy Net Profit CAGR of 10.2% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities: Rs 0.0 cr for period ended Mar 2022 vis-vis Rs -5.8 cr for period ended Mar 2021
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 15.0% compared to 11.0% over the last 3 Years. – The stock has given a return of -5% 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 -25% over the last 3 Years. – The compounded profit growth on a TTM basis is 2367% vis-vis a compounded profit growth of 10% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has risen for the period ended Mar 2022. The Mar 2022 public holding stood at 49.79% vis-vis 29.96% for Dec 2021
Conclusion
– – Stock is trading at 3.02 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-Promoter holding has decreased over last quarter: -19.83%
-The company has delivered a poor sales growth of -2.05% over past five years.
– has a low return on equity of 10.55% for last 3 years.
– might be capitalizing the interest cost
-Earnings include an other income of Rs.7.70 Cr.
– has high debtors of 185.10 days.
Fundamentally, the stock remains weak. The business fundamentals are on shaky ground. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock reflects the poor fundamentals. The stock remains below its 50 DMA 7.17 and is trading at 7.1. It has shown near term lack of bullish momentum. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
