Mehabe score: 1 G Factor: 2 Piotski Score: 3 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 2 and Piotski score of 3.
Description
Having started its journey in 1935 , Huhtamaki is India’s leading manufacturer and supplier of sustainable, flexible and innovative solutions in packaging and labelling products. Site:HUHTAMAKI Main Symbol:HUHTAMAKI
Stock trades at 182.0, above its 50dma 175.59. However it is trading below its 200dma 219.84. The stock remains weak though short term bullish momentum supports price action. It needs to close above 219.84 for bullish price action to continue
The 52 week high is at 328.00 and the 52week low is at 148.00
Price Chart
P/E Chart
Sales and Margin
Strengths
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Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of 3.78% over past five years.
– has a low return on equity of 12.29% for last 3 years.
– might be capitalizing the interest cost
-Dividend payout has been low at 1.21% of profits over last 3 years
Competition
– The industry trades at a mean P/E of 13.9x. Huhtamaki India trades at the industry’s max P/E of 583.77x. HUHTAMAKI trades at a P/E of 584.0x
– Industry’s mean G-Factor is 4.8 while the mean Piotski score is 9.0. HUHTAMAKI has a G-Factor of 2 and Piotski scoreof 3.
– Average 1 month return for industry is 9.9%. The max 1- month return was given by Polyplex Corpn: a return of 27.05 %
Quarterly Results
Sales for period ended Dec 2021 is Rs 662.0 cr compared to Rs 558.0 cr for period ended Dec 2020, a rise of 18.6% .
vis-vis 35.0 for period ended Dec 2020 .
Operating Margins contracted -461.1 bps for period ended Dec 2021 vis-vis Dec 2020.
Company reported operating profit of Rs 11.0 cr for period ended Dec 2021 and operating profit margin at 1.7 % for same period.
The EPS for quarter ended Dec 2021 is Rs -1.79 compared to Rs -2.89 for previous quarter ended Sep 2021 and Rs 0.67 for Dec 2020.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 2625.0 cr for period ended Dec 2021 vis-vis sales of Rs 2463.0 cr for the period ended Dec 2020, a growth of 6.2%. The 3 year sales cagr stood at 3.5%.
Operating margins shrank to 4.0% for period ended Dec 2021 vis-vis 10.0% for period ended Dec 2020, contraction of 600.0 bps.
Net Profit reported at Rs -23.0 cr for period ended Dec 2021 vis-vis sales of Rs 96.0 cr for the period ended Dec 2020, falling 0%.
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 worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 0.0% compared to 12.0% over the last 3 Years. – The stock has given a return of -33% on a 1 Year basis vis-vis a return of -7% over the last 3 Years. – The compounded sales growth on a TTM bassis is 7% vis-vis a compounded sales growth of 3% over the last 3 Years. – The compounded profit growth on a TTM basis is -97% vis-vis a compounded profit growth of -57% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2022 fii holding stood at 4.23% vis-vis 4.3% for Dec 2021 – Public shareholding has remained largely constant. The Mar 2022 public holding stood at 27.6% vis-vis 27.07% for Dec 2021
Conclusion
– – has low interest coverage ratio.
-The company has delivered a poor sales growth of 3.78% over past five years.
– has a low return on equity of 12.29% for last 3 years.
– might be capitalizing the interest cost
-Dividend payout has been low at 1.21% 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 175.59 and is trading at 182.0 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
