Mehabe score: 8 G Factor: 3 Piotski Score: 8 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 8.
Description
Incorporated in 2010, Lagnam Spintex Ltd is engaged in the business of manufacturing Ring & Open end Cotton yarns for domestic and international market. It exports to countries like Portugal, China, Bangladesh, etc and their yarns are used in apparel & garment industry [1] [2] Site:LAGNAM Main Symbol:LAGNAM
Stock trades at 82.2, above its 50dma 60.6. It also trades above its 200dma 42.72. The stock remains bullish on techicals
The 52 week high is at 91.90 and the 52week low is at 13.15
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
Weakness
– has a low return on equity of 6.95% for last 3 years.
-Promoters have pledged 48.98% of their holding.
Competition
– The industry trades at a mean P/E of 30.7x. Raymond trades at the industry’s max P/E of 235.23x. LAGNAM trades at a P/E of 5.19x
– Industry’s mean G-Factor is 2.5 while the mean Piotski score is 9.0. LAGNAM has a G-Factor of 3 and Piotski scoreof 8.
– Average 1 month return for industry is 13.4%. The max 1- month return was given by Lagnam Spintex: a return of 58.94 %
Quarterly Results
Sales for period ended Dec 2021 is Rs 90.95 cr compared to Rs 62.71 cr for period ended Dec 2020, a rise of 45.0% .
vis-vis 10.04 for period ended Dec 2020 .
Operating Margins expanded 340.7 bps for period ended Dec 2021 vis-vis Dec 2020.
Company reported operating profit of Rs 17.66 cr for period ended Dec 2021 and operating profit margin at 19.4 % for same period.
The EPS for quarter ended Dec 2021 is Rs 5.32 compared to Rs 3.49 for previous quarter ended Sep 2021 and Rs 2.57 for Dec 2020.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 320.0 cr for period ended TTM vis-vis sales of Rs 205.0 cr for the period ended Mar 2021, a healthy growth of 35.9%. The 3 year sales cagr stood at 58.7%.
Operating margins expanded to 18.0% for period ended TTM vis-vis 13.0% for period ended Mar 2021, expansion of 500.0 bps.
Net Profit reported at Rs 28.0 cr for period ended TTM vis-vis sales of Rs 5.0 cr for the period ended Mar 2021, rising 82.1%.
Company recorded a healthy Net Profit CAGR of 77.6% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 6.0 cr for period ended Mar 2021 vis-vis Rs -7.0 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 8.0% compared to 7.0% over the last 3 Years. – The stock has given a return of 405% on a 1 Year basis vis-vis a return of 73% over the last 3 Years. – The compounded sales growth on a TTM bassis is 16% vis-vis a compounded sales growth of 35% over the last 3 Years. – The compounded profit growth on a TTM basis is 310% vis-vis a compounded profit growth of -1% over the last 3 Years.
Ratios
Conclusion
– has reduced debt. – has a low return on equity of 6.95% for last 3 years.
-Promoters have pledged 48.98% of their holding.
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 60.6 and is trading at 82.2 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
