Home Investment Memo: JASH

Investment Memo: JASH

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Our Rating: OBSERVE & HOLD

Mehabe score: 4
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

Jash Engineering Limited is manufacturing a wide range of equipment for Water Intake Systems, Water and Waste Water Pumping Stations and Treatment Plants, Storm Water Pumping Stations, Water Transmission Lines, Power, Steel, Cement, Paper & Pulp, Petrochemicals, Chemical, Fertilizers, and other process plants. #

Main Points

Product Basket #
– Water Control Gates 47% of revenues
– Valves 17% of revenues
– Screening Equipments 18% of revenues
– Hydropower & Pumping, Process Equipment, and others 18% of revenuesSite: JASH

Market Cap: Rs 558 cr Price: 470.0 Trading pe: 18.3x
Book-value: 106/share Div yield: 0.19 % Earning yield: 6.09%
Face-value: 10.0/share 52week high: 459.00 52week low: 136.00

Technical Analysis

  • Stock trades at 470.0, above its 50dma 381.48. It also trades above its 200dma 288.7. The stock remains bullish on techicals
  • The 52 week high is at 459.00 and the 52week low is at 136.00

Price Chart

P/E Chart

Sales and Margin

Strengths

– has delivered good profit growth of 33.20% CAGR over last 5 years

Weakness

– Promoter holding has decreased over last quarter: -0.42%

Competition

– The industry trades at a mean P/E of 20.6x. GMM Pfaudler trades at the industry’s max P/E of 93.14x. JASH trades at a P/E of 18.3x
– Industry’s mean G-Factor is 3.6 while the mean Piotski score is 8.0. JASH has a G-Factor of 3 and Piotski scoreof 7.
– Average 1 month return for industry is 1.4%. The max 1- month return was given by Praj Industries: a return of 8.88 %

Quarterly Results

  • Sales for period ended Mar 2021 is Rs 129.0 cr compared to Rs 88.0 cr for period ended Mar 2020, a rise of 46.6%
  • Operating Profits reported at Rs 31.0 cr for period ended Mar 2021 vis-vis 13.0 for period ended Mar 2020 .
  • Operating Margins expanded 925.8 bps for period ended Mar 2021 vis-vis Mar 2020 .
  • The EPS for Mar 2021 was Rs 20.0 compared to Rs 8.55 for previous quarter ended Dec 2020 and Rs 8.52 for Mar 2020

Profit & Loss Statement

Profit&Loss Comments

  • Company reported sales of Rs 299.0 cr for period ended Mar 2021 vis-vis sales of Rs 278.0 cr for the period ended Mar 2020, a growth of 7.0%. The 3 year sales cagr stood at 19.5%.
  • Operating margins expanded to 17.0% for period ended Mar 2021 vis-vis 14.0% for period ended Mar 2020, expansion of 300.0 bps.
  • Net Profit reported at Rs 31.0 cr for period ended Mar 2021 vis-vis sales of Rs 20.0 cr for the period ended Mar 2020, rising 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 improved its Return on Equity (RoE) metric. The RoE on Last Year basis was 24.0% compared to 17.0% over the last 3 Years.
    – The stock has given a return of 192% on a 1 Year basis vis-vis a return of 62% over the last 3 Years.
    – The compounded sales growth on a TTM bassis is 8% vis-vis a compounded sales growth of 20% over the last 3 Years.
    – The compounded profit growth on a TTM basis is 51% vis-vis a compounded profit growth of 244% over the last 3 Years.

    Ratios

    Conclusion

    – has delivered good profit growth of 33.20% CAGR over last 5 years – Promoter holding has decreased over last quarter: -0.42%

    • 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 381.48 and is trading at 470.0 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
    • Thus, overall, we retain a OBSERVE & HOLD.

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