Mehabe score: 3 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
Igarashi Motors India Ltd is engaged in the production and export of Permanent Magnet DC Motors for the Automotive Sector especially for the passenger vehicle sector#
It was incorporated as CG Igarashi Motors Limited in 1992 as a JV between Crompton Greaves Ltd(India), Igarashi Electric Works Ltd, Japan, and International Components Corporation, USA.
Over a period, IEWL consolidated its stake in the Company by acquiring a stake of exited JV Partners.
Main Points
Products
It manufactures Permanent Magnet DC, which are generally classified under Torque actuator Motors (TAM). It is used in the Automotive sector for seat applications and motor accessories.
It has developed a Brushless DC motor(BLDC) which is used in consumer applications like fans.
It has recently forayed into Electronic System Design and Manufacturing (ESDM) space with the establishment of the Driver and Controller line for BLDC for an initial capacity of 2.5 million Controllers per yearSite:IGARASHIMain Symbol:IGARASHI
Stock trades at 554.0, above its 50dma 453.53. It also trades above its 200dma 368.88. The stock remains bullish on techicals
The 52 week high is at 549.75 and the 52week low is at 241.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– has been maintaining a healthy dividend payout of 19.31%
Weakness
– Stock is trading at 3.97 times its book value
-The company has delivered a poor sales growth of 3.67% over past five years.
– has a low return on equity of 8.88% for last 3 years.
Competition
– The industry trades at a mean P/E of 32.8x. WABCO India trades at the industry’s max P/E of 131.33x. IGARASHI trades at a P/E of 68.1x
– Industry’s mean G-Factor is 3.8 while the mean Piotski score is 7.0. IGARASHI has a G-Factor of 3 and Piotski scoreof 6.
– Average 1 month return for industry is 3.4%. The max 1- month return was given by Igarashi Motors: a return of 17.73 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 169.0 cr compared to Rs 118.0 cr for period ended Mar 2020, a rise of 43.2%
Operating Profits reported at Rs 27.0 cr for period ended Mar 2021 vis-vis 13.0 for period ended Mar 2020 .
Operating Margins expanded 495.9 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 3.49 compared to Rs 4.24 for previous quarter ended Dec 2020 and Rs 0.69 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 533.0 cr for period ended Mar 2021 vis-vis sales of Rs 534.0 cr for the period ended Mar 2020, a fall of 0.2%. The 3 year sales cagr stood at -7.4%.
Operating margins shrank to 14.0% for period ended Mar 2021 vis-vis 15.0% for period ended Mar 2020, contraction of 100.0 bps.
Net Profit reported at Rs 26.0 cr for period ended Mar 2021 vis-vis sales of Rs 30.0 cr for the period ended Mar 2020, falling 15.4%.
Company reported a poor Net Profit CAGR of -35.1% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The stock has given a return of 99% 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 -0% vis-vis a compounded sales growth of -7% over the last 3 Years. – The compounded profit growth on a TTM basis is -14% vis-vis a compounded profit growth of -35% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 0.05% vis-vis 1.09% for Dec 2020 – Public shareholding has risen for the period ended Mar 2021. The Mar 2021 public holding stood at 22.72% vis-vis 16.27% for Dec 2020
Conclusion
– has reduced debt.
– has been maintaining a healthy dividend payout of 19.31% – Stock is trading at 3.97 times its book value
-The company has delivered a poor sales growth of 3.67% over past five years.
– has a low return on equity of 8.88% for 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 453.53 and is trading at 554.0 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
