Mehabe score: 5 G Factor: 6 Piotski Score: 4 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 6 and Piotski score of 4.
Description
KOEL, one of the flagship companies of the Kirloskar group, manufactures and services diesel engines and diesel generator sets. The company also makes diesel, petrol and kerosene-based pump sets. It has manufacturing units in Pune, Kagal, and Nashik. The company caters to the agriculture, power generation, and industrial sectors.#
Main Points
Market Position
India’s largest Industrial Engine manufacturer with over 40,000 engines manufactured annually#
India’s largest diesel Agri engines and pump sets manufacturer with over 1,45,000 units manufactured annually#Site:KIRLOSENGMain Symbol:KIRLOSENG
Stock trades at 255.0, above its 50dma 227.75. It also trades above its 200dma 175.87. The stock remains bullish on techicals
The 52 week high is at 263.00 and the 52week low is at 94.25
Price Chart
P/E Chart
Sales and Margin
Strengths
– has been maintaining a healthy dividend payout of 31.30%
Weakness
– The company has delivered a poor sales growth of 6.00% over past five years.
– has a low return on equity of 10.54% for last 3 years.
Competition
– The industry trades at a mean P/E of 26.4x. Cummins India trades at the industry’s max P/E of 37.53x. KIRLOSENG trades at a P/E of 18.3x
– Industry’s mean G-Factor is 5.2 while the mean Piotski score is 7.0. KIRLOSENG has a G-Factor of 6 and Piotski scoreof 4.
– Average 1 month return for industry is 10.4%. The max 1- month return was given by G G Engineering: a return of 18.12 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 1087.0 cr compared to Rs 827.0 cr for period ended Mar 2020, a rise of 31.4%
Operating Profits reported at Rs 147.0 cr for period ended Mar 2021 vis-vis 87.0 for period ended Mar 2020 .
Operating Margins expanded 300.4 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 5.4 compared to Rs 4.58 for previous quarter ended Dec 2020 and Rs 3.64 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 3296.0 cr for period ended Mar 2021 vis-vis sales of Rs 3379.0 cr for the period ended Mar 2020, a fall of 2.5%. The 3 year sales cagr stood at 2.6%.
Operating margins expanded to 12.0% for period ended Mar 2021 vis-vis 8.0% for period ended Mar 2020, expansion of 400.0 bps.
Net Profit reported at Rs 195.0 cr for period ended Mar 2021 vis-vis sales of Rs 185.0 cr for the period ended Mar 2020, rising 5.1%.
Company recorded a healthy Net Profit CAGR of 11.7% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities: Rs -16.0 cr for period ended Mar 2021 vis-vis Rs -124.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 11.0% compared to 11.0% over the last 3 Years. – The stock has given a return of 137% on a 1 Year basis vis-vis a return of -0% over the last 3 Years. – The compounded sales growth on a TTM bassis is -2% vis-vis a compounded sales growth of 3% over the last 3 Years. – The compounded profit growth on a TTM basis is 27% vis-vis a compounded profit growth of 13% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has fallen for the period ended Mar 2021. The Mar 2021 fii holding stood at 6.23% vis-vis 10.25% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 20.24% vis-vis 19.8% for Dec 2020
Conclusion
– has been maintaining a healthy dividend payout of 31.30% – The company has delivered a poor sales growth of 6.00% over past five years.
– has a low return on equity of 10.54% 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 227.75 and is trading at 255.0 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
