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
La Opala RG is a leading manufacturer and marketer of tablewares (opal and glass) in India.
Main Points
Diversified Brand Portfolio #
The company has three main brands:
– La Opala (15% of revenue): economy opalware
– Diva (81% of revenue): premium opalware. Within Diva, there is: Classique, Ivory, Quadra and Sovrana, each targeting a different pocketbook .
– Solitaire (4% of revenue): premium crystalware.Site:LAOPALAMain Symbol:LAOPALA
Stock trades at 273.0, above its 50dma 269.44. It also trades above its 200dma 240.48. The stock remains bullish on techicals
The 52 week high is at 314.80 and the 52week low is at 191.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is almost debt free.
– is expected to give good quarter
– has been maintaining a healthy dividend payout of 22.46%
Weakness
– The company has delivered a poor sales growth of -3.14% over past five years.
– has a low return on equity of 12.19% for last 3 years.
Competition
– The industry trades at a mean P/E of 29.2x. Borosil trades at the industry’s max P/E of 60.38x. LAOPALA trades at a P/E of 49.2x
– Industry’s mean G-Factor is 3.0 while the mean Piotski score is 8.0. LAOPALA has a G-Factor of 3 and Piotski scoreof 6.
– Average 1 month return for industry is -5.6%. The max 1- month return was given by Borosil Renew.: a return of 8.61 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 32.17 cr compared to Rs 10.11 cr for period ended Jun 2020, a rise of 218.2%
Company reported operating profit of Rs 9.52 cr for period ended Jun 2021, operating profit margin at 29.6 %.
Operating profit was negative for the same period last year thus company has improved its margins this year
The EPS for Jun 2021 was Rs 0.8 compared to Rs 1.79 for previous quarter ended Mar 2021 and Rs -0.27 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 233.0 cr for period ended TTM vis-vis sales of Rs 211.0 cr for the period ended Mar 2021, a growth of 9.4%. The 3 year sales cagr stood at -5.7%.
Operating margins expanded to 35.0% for period ended TTM vis-vis 32.0% for period ended Mar 2021, expansion of 300.0 bps.
Net Profit reported at Rs 61.0 cr for period ended TTM vis-vis sales of Rs 50.0 cr for the period ended Mar 2021, rising 18.0%.
Company reported a poor Net Profit CAGR of -6.2% 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 83.0 cr for period ended Mar 2021 vis-vis Rs 73.0 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 worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 8.0% compared to 12.0% over the last 3 Years. – The stock has given a return of 40% on a 1 Year basis vis-vis a return of 2% over the last 3 Years. – The compounded sales growth on a TTM bassis is 5% vis-vis a compounded sales growth of -7% over the last 3 Years. – The compounded profit growth on a TTM basis is 1% vis-vis a compounded profit growth of -13% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 6.25% vis-vis 6.2% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 12.35% vis-vis 12.29% for Mar 2021
Conclusion
– has reduced debt.
– is almost debt free.
– is expected to give good quarter
– has been maintaining a healthy dividend payout of 22.46% – The company has delivered a poor sales growth of -3.14% over past five years.
– has a low return on equity of 12.19% 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 269.44 and is trading at 273.0 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
