Mehabe score: 4 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
Greaves Cotton is engaged in manufacturing of engines, engine applications and trading of power tillers, spares related to engines, electric vehicles and infrastructure equipment etc.(Source : 202003 Annual Report Page No:98) Site:GREAVESCOT Main Symbol:GREAVESCOT
Stock trades at 202.0, above its 50dma 185.97. It also trades above its 200dma 152.56. The stock remains bullish on techicals
The 52 week high is at 258.90 and the 52week low is at 85.10
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
Weakness
– The company has delivered a poor sales growth of -1.47% over past five years.
– has a low return on equity of 12.45% for last 3 years.
-Dividend payout has been low at 11.56% of profits over last 3 years
Competition
– The industry trades at a mean P/E of 19.1x. Cummins India trades at the industry’s max P/E of 32.37x. GREAVESCOT trades at a P/E of x
– Industry’s mean G-Factor is 3.4 while the mean Piotski score is 8.0. GREAVESCOT has a G-Factor of 3 and Piotski scoreof 5.
– Average 1 month return for industry is -3.3%. The max 1- month return was given by Greaves Cotton: a return of 15.75 %
Quarterly Results
Sales for period ended Sep 2021 is Rs 374.0 cr compared to Rs 329.0 cr for period ended Sep 2020, a rise of 13.7% .
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Company reported negative operating profit of Rs -10.0 cr for period ended Sep 2021. For same period last year, operating profit was 16.0.
The EPS for quarter ended Sep 2021 is Rs -1.01 compared to Rs -0.97 for previous quarter ended Jun 2021 and Rs -0.97 for Sep 2020.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1617.0 cr for period ended TTM vis-vis sales of Rs 1500.0 cr for the period ended Mar 2021, a growth of 7.2%. The 3 year sales cagr stood at -7.1%.
Operating margins shrank to 4.0% for period ended TTM vis-vis 5.0% for period ended Mar 2021, contraction of 100.0 bps.
Net Profit reported at Rs -11.0 cr for period ended TTM vis-vis sales of Rs -19.0 cr for the period ended Mar 2021, rising 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 147.0 cr for period ended Mar 2021 vis-vis Rs 102.0 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 worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 4.0% compared to 12.0% over the last 3 Years. – The stock has given a return of 135% on a 1 Year basis vis-vis a return of 19% over the last 3 Years. – The compounded sales growth on a TTM bassis is 16% vis-vis a compounded sales growth of -6% over the last 3 Years. – The compounded profit growth on a TTM basis is -152% vis-vis a compounded profit growth of -38% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Dec 2021 fii holding stood at 3.84% vis-vis 3.81% for Sep 2021 – Public shareholding has remained largely constant. The Dec 2021 public holding stood at 31.35% vis-vis 31.2% for Sep 2021
Conclusion
– is almost debt free. – The company has delivered a poor sales growth of -1.47% over past five years.
– has a low return on equity of 12.45% for last 3 years.
-Dividend payout has been low at 11.56% of profits over last 3 years
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 185.97 and is trading at 202.0 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
