Mehabe score: 3 G Factor: 0 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 0 and Piotski score of 5.
Description
ERP Soft Systems is engaged in the business of Computer Programming, Consultancy and related services. Site:ERPSOFT Main Symbol:ERPSOFT
Stock trades at 63.5, above its 50dma 40.26. It also trades above its 200dma 41.86. The stock remains bullish on techicals
The 52 week high is at 63.50 and the 52week low is at 25.80
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of -13.83% over past five years.
– has a low return on equity of 1.43% for last 3 years.
– has high debtors of 218.01 days.
Competition
– The industry trades at a mean P/E of 31.4x. ERP Soft Systems trades at the industry’s max P/E of 114.31x. ERPSOFT trades at a P/E of 114.0x
– Industry’s mean G-Factor is 3.0 while the mean Piotski score is 9.0. ERPSOFT has a G-Factor of 0 and Piotski scoreof 5.
– Average 1 month return for industry is -0.4%. The max 1- month return was given by ERP Soft Systems: a return of 97.2 %
Quarterly Results
Sales for period ended Dec 2021 is Rs 4.03 cr compared to Rs 2.72 cr for period ended Dec 2020, a rise of 48.2% .
vis-vis 0.05 for period ended Dec 2020 .
Operating Margins contracted -34.9 bps for period ended Dec 2021 vis-vis Dec 2020.
Company reported operating profit of Rs 0.06 cr for period ended Dec 2021 and operating profit margin at 1.5 % for same period.
The EPS for quarter ended Dec 2021 is Rs 0.08 compared to Rs 0.08 for previous quarter ended Sep 2021 and Rs 0.28 for Dec 2020.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 16.84 cr for period ended TTM vis-vis sales of Rs 12.54 cr for the period ended Mar 2021, a healthy growth of 25.5%. The 3 year sales cagr stood at -4.7%.
Operating margins shrank to 1.78% for period ended TTM vis-vis 1.91% for period ended Mar 2021, contraction of 13.0 bps.
Net Profit reported at Rs 0.14 cr for period ended TTM vis-vis sales of Rs 0.36 cr for the period ended Mar 2021, falling 157.1%.
Company reported a poor Net Profit CAGR of -25.6% 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 had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 2.0% compared to 1.0% over the last 3 Years. – The stock has given a return of 10% on a 1 Year basis vis-vis a return of % over the last 3 Years. – The compounded sales growth on a TTM bassis is 52% vis-vis a compounded sales growth of -23% over the last 3 Years. – The compounded profit growth on a TTM basis is 10% vis-vis a compounded profit growth of -27% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Dec 2021 public holding stood at 44.24% vis-vis 44.24% for Sep 2021
Conclusion
– is almost debt free. – Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of -13.83% over past five years.
– has a low return on equity of 1.43% for last 3 years.
– has high debtors of 218.01 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 40.26 and is trading at 63.5 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
