Mehabe score: 5 G Factor: 3 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 3 and Piotski score of 5.
Description
Gautam Gems is an importer, exporter, and manufacturer of rough and polished diamonds. It is a Surat-based company. The company sells diamonds of multiple categories, shapes, cuts, sizes, and colors. It deals in both polished and rough diamonds. Site:GGL Main Symbol:GGL
Stock trades at 14.0, above its 50dma 13.23. However it is trading below its 200dma 16.71. The stock remains weak though short term bullish momentum supports price action. It needs to close above 16.71 for bullish price action to continue
The 52 week high is at 65.15 and the 52week low is at 8.27
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.94 times its book value
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
-Promoter holding has decreased over last quarter: -18.81%
-Promoter holding is low: 36.86%
– has a low return on equity of 2.73% for last 3 years.
– might be capitalizing the interest cost
Competition
– The industry trades at a mean P/E of 29.9x. Titan Company trades at the industry’s max P/E of 133.05x. GGL trades at a P/E of 10.1x
– Industry’s mean G-Factor is 3.2 while the mean Piotski score is 7.0. GGL has a G-Factor of 3 and Piotski scoreof 5.
– Average 1 month return for industry is 5.6%. The max 1- month return was given by Gautam Gems: a return of 16.32 %
Quarterly Results
Sales for period ended Dec 2021 is Rs 37.25 cr compared to Rs 32.24 cr for period ended Dec 2020, a rise of 15.5% .
vis-vis 2.51 for period ended Dec 2020 .
Operating Margins contracted -746.3 bps for period ended Dec 2021 vis-vis Dec 2020.
Company reported operating profit of Rs 0.12 cr for period ended Dec 2021 and operating profit margin at 0.3 % for same period.
The EPS for quarter ended Dec 2021 is Rs 0.12 compared to Rs 0.8 for previous quarter ended Sep 2021 and Rs 2.05 for Dec 2020.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 174.0 cr for period ended TTM vis-vis sales of Rs 94.0 cr for the period ended Mar 2021, a healthy growth of 46.0%. The 3 year sales cagr stood at 58.1%.
Net Profit reported at Rs -1.0 cr for period ended TTM vis-vis sales of Rs 0.0 cr for the period ended Mar 2021, falling 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 1.0 cr for period ended Mar 2021 vis-vis Rs 0.0 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 had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 2.0% compared to 3.0% over the last 3 Years. – The stock has given a return of -61% on a 1 Year basis vis-vis a return of -31% over the last 3 Years. – The compounded sales growth on a TTM bassis is -71% vis-vis a compounded sales growth of 48% over the last 3 Years. – The compounded profit growth on a TTM basis is -40% vis-vis a compounded profit growth of 62% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has risen for the period ended Dec 2021. The Dec 2021 public holding stood at 63.14% vis-vis 44.33% for Sep 2021
Conclusion
– Stock is trading at 0.94 times its book value – Though the company is reporting repeated profits, it is not paying out dividend
-Promoter holding has decreased over last quarter: -18.81%
-Promoter holding is low: 36.86%
– has a low return on equity of 2.73% for last 3 years.
– might be capitalizing the interest cost
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 13.23 and is trading at 14.0 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
