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
Indokem is engaged in the business to deals in dyes, sizing chemicals and auxiliaries in textile industry. The Company also deals in electrical capacitors. Site:INDOKEM Main Symbol:INDOKEM
Stock trades at 39.6, above its 50dma 38.41. It also trades above its 200dma 35.01. The stock remains bullish on techicals
The 52 week high is at 53.40 and the 52week low is at 20.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– is expected to give good quarter
Weakness
– Stock is trading at 2.95 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of 6.36% over past five years.
– has a low return on equity of 2.66% for last 3 years.
Competition
– The industry trades at a mean P/E of 22.2x. Sadhana Nitro trades at the industry’s max P/E of 115.99x. INDOKEM trades at a P/E of 33.0x
– Industry’s mean G-Factor is 3.0 while the mean Piotski score is 7.0. INDOKEM has a G-Factor of 3 and Piotski scoreof 6.
– Average 1 month return for industry is 23.6%. The max 1- month return was given by Sadhana Nitro: a return of 142.33 %
Quarterly Results
Sales for period ended Dec 2021 is Rs 34.17 cr compared to Rs 22.23 cr for period ended Dec 2020, a rise of 53.7% .
vis-vis 1.9 for period ended Dec 2020 .
Operating Margins contracted -222.6 bps for period ended Dec 2021 vis-vis Dec 2020.
Company reported operating profit of Rs 2.16 cr for period ended Dec 2021 and operating profit margin at 6.3 % for same period.
The EPS for quarter ended Dec 2021 is Rs 0.64 compared to Rs 0.08 for previous quarter ended Sep 2021 and Rs 0.56 for Dec 2020.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 110.0 cr for period ended TTM vis-vis sales of Rs 79.0 cr for the period ended Mar 2021, a healthy growth of 28.2%. The 3 year sales cagr stood at 11.7%.
Operating margins shrank to 4.0% for period ended TTM vis-vis 7.0% for period ended Mar 2021, contraction of 300.0 bps.
Net Profit reported at Rs 3.0 cr for period ended TTM vis-vis sales of Rs 3.0 cr for the period ended Mar 2021,
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 company has improved its Return on Equity (RoE) metric. The RoE on Last Year basis was 10.0% compared to 3.0% over the last 3 Years. – The stock has given a return of 62% on a 1 Year basis vis-vis a return of 40% over the last 3 Years. – The compounded sales growth on a TTM bassis is 33% vis-vis a compounded sales growth of 1% over the last 3 Years. – The compounded profit growth on a TTM basis is 36% vis-vis a compounded profit growth of 57% over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Dec 2021 public holding stood at 28.85% vis-vis 28.85% for Sep 2021
Conclusion
– is expected to give good quarter – Stock is trading at 2.95 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of 6.36% over past five years.
– has a low return on equity of 2.66% 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 38.41 and is trading at 39.6 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
