Mehabe score: 2 G Factor: 3 Piotski Score: 7 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 7.
Description
Innovative Tech Pack incorporated in 1989, is engaged in the business of manufacturing jars, bottles, caps and containers using PET, PP, HDPE & PCTA for the FMCG, food & beverage and pharmaceutical industries. Site:INNOVTEC Main Symbol:INNOVTEC
Stock trades at 18.8, above its 50dma 8.66. It also trades above its 200dma 9.73. The stock remains bullish on techicals
The 52 week high is at 20.45 and the 52week low is at 6.70
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 1.10 times its book value
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of 10.00% over past five years.
– has a low return on equity of 2.04% for last 3 years.
-‘s cost of borrowing seems high
Competition
– The industry trades at a mean P/E of 29.0x. Responsive Ind trades at the industry’s max P/E of 349.71x. INNOVTEC trades at a P/E of x
– Industry’s mean G-Factor is 2.9 while the mean Piotski score is 9.0. INNOVTEC has a G-Factor of 3 and Piotski scoreof 7.
– Average 1 month return for industry is -13.3%. The max 1- month return was given by Responsive Ind: a return of 2.87 %
Quarterly Results
Sales for period ended Dec 2021 is Rs 40.52 cr compared to Rs 36.68 cr for period ended Dec 2020, a rise of 10.5% .
vis-vis 3.71 for period ended Dec 2020 .
Operating Margins contracted -130.4 bps for period ended Dec 2021 vis-vis Dec 2020.
Company reported operating profit of Rs 3.57 cr for period ended Dec 2021 and operating profit margin at 8.8 % for same period.
The EPS for quarter ended Dec 2021 is Rs -0.35 compared to Rs -1.16 for previous quarter ended Sep 2021 and Rs -0.26 for Dec 2020.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 159.0 cr for period ended TTM vis-vis sales of Rs 144.0 cr for the period ended Mar 2021, a growth of 9.4%. The 3 year sales cagr stood at 3.4%.
Operating margins shrank to 6.0% for period ended TTM vis-vis 10.0% for period ended Mar 2021, contraction of 400.0 bps.
Net Profit reported at Rs -9.0 cr for period ended TTM vis-vis sales of Rs -2.0 cr for the period ended Mar 2021, 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 -5.0% compared to 2.0% over the last 3 Years. – The stock has given a return of -15% on a 1 Year basis vis-vis a return of -9% over the last 3 Years. – The compounded sales growth on a TTM bassis is 10% vis-vis a compounded sales growth of 5% over the last 3 Years. – The compounded profit growth on a TTM basis is -743% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Dec 2021 fii holding stood at 0.0% vis-vis 0.0% for Sep 2021 – Public shareholding has remained largely constant. The Dec 2021 public holding stood at 25.58% vis-vis 25.58% for Sep 2021
Conclusion
– Stock is trading at 1.10 times its book value – has low interest coverage ratio.
-The company has delivered a poor sales growth of 10.00% over past five years.
– has a low return on equity of 2.04% for last 3 years.
-‘s cost of borrowing seems high
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 8.66 and is trading at 18.8 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
