Mehabe score: 5 G Factor: 3 Piotski Score: 6 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 6.
Description
Godavari Drugs Ltd is engaged in the Business of manufacture and sale of Active Pharmaceutical Ingredients
(APIs).[1] Site:GODAVARI Main Symbol:GODAVARI
Stock trades at 69.0, above its 50dma 64.33. It also trades above its 200dma 61.69. The stock remains bullish on techicals
The 52 week high is at 83.60 and the 52week low is at 46.60
Price Chart
P/E Chart
Sales and Margin
Strengths
– is expected to give good quarter
– has delivered good profit growth of 23.74% CAGR over last 5 years
-‘s median sales growth is 28.18% of last 10 years
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
Competition
– The industry trades at a mean P/E of 24.9x. Divi’s Lab. trades at the industry’s max P/E of 45.64x. GODAVARI trades at a P/E of 9.9x
– Industry’s mean G-Factor is 3.5 while the mean Piotski score is 8.0. GODAVARI has a G-Factor of 3 and Piotski scoreof 6.
– Average 1 month return for industry is 4.4%. The max 1- month return was given by Godavari Drugs: a return of 15.58 %
Quarterly Results
Sales for period ended Mar 2022 is Rs 44.28 cr compared to Rs 32.96 cr for period ended Mar 2021, a rise of 34.3% .
vis-vis 2.57 for period ended Mar 2021 .
Operating Margins contracted -170.0 bps for period ended Mar 2022 vis-vis Mar 2021.
Company reported operating profit of Rs 2.7 cr for period ended Mar 2022 and operating profit margin at 6.1 % for same period.
The EPS for quarter ended Mar 2022 is Rs 1.69 compared to Rs 1.77 for previous quarter ended Dec 2021 and Rs 1.71 for Mar 2021.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 161.0 cr for period ended Mar 2022 vis-vis sales of Rs 123.0 cr for the period ended Mar 2021, a healthy growth of 23.6%. The 3 year sales cagr stood at 24.2%.
Operating margins shrank to 7.0% for period ended Mar 2022 vis-vis 8.0% for period ended Mar 2021, contraction of 100.0 bps.
Net Profit reported at Rs 5.0 cr for period ended Mar 2022 vis-vis sales of Rs 4.0 cr for the period ended Mar 2021, rising 20.0%.
Company recorded a healthy Net Profit CAGR of 71.0% 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 improved its Return on Equity (RoE) metric. The RoE on Last Year basis was 22.0% compared to 17.0% over the last 3 Years. – The stock has given a return of 32% on a 1 Year basis vis-vis a return of 46% over the last 3 Years. – The compounded sales growth on a TTM bassis is 31% vis-vis a compounded sales growth of 24% over the last 3 Years. – The compounded profit growth on a TTM basis is 27% vis-vis a compounded profit growth of 63% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Mar 2022 public holding stood at 43.15% vis-vis 43.38% for Dec 2021
Conclusion
– is expected to give good quarter
– has delivered good profit growth of 23.74% CAGR over last 5 years
-‘s median sales growth is 28.18% of last 10 years – Though the company is reporting repeated profits, it is not paying out dividend
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 64.33 and is trading at 69.0 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
