Home Investment Memo: MUNJALSHOW

Investment Memo: MUNJALSHOW

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Our Rating: HOLD

Mehabe score: 2
G Factor: 5
Piotski Score: 5
The stock has a rating 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 5 and Piotski score of 5.

Description

Munjal Showa is engaged in the business of operates as an ancilliary and manufactures auto components for the two-wheeler and four-wheeler industry, primary products being shock absorbers, struts and window balancers.Site: MUNJALSHOW

Market Cap: Rs 666 cr Price: 167.0 Trading pe: 21.7x
Book-value: 154/share Div yield: 2.70 % Earning yield: 5.71%
Face-value: 2.00/share 52week high: 176.45 52week low: 94.80

Technical Analysis

  • Stock trades at 167.0, above its 50dma 151.07. It also trades above its 200dma 140.73. The stock remains bullish on techicals
  • The 52 week high is at 176.45 and the 52week low is at 94.80

Price Chart

P/E Chart

Sales and Margin

Strengths

– is almost debt free.
-Stock is trading at 1.08 times its book value
– has been maintaining a healthy dividend payout of 31.43%

Weakness

– The company has delivered a poor sales growth of -4.75% over past five years.
– has a low return on equity of 8.53% for last 3 years.
-Earnings include an other income of Rs.28.71 Cr.

Competition

– The industry trades at a mean P/E of 31.9x. WABCO India trades at the industry’s max P/E of 126.04x. MUNJALSHOW trades at a P/E of 21.7x
– Industry’s mean G-Factor is 4.1 while the mean Piotski score is 7.0. MUNJALSHOW has a G-Factor of 5 and Piotski scoreof 5.
– Average 1 month return for industry is 2.4%. The max 1- month return was given by Minda Industries: a return of 13.28 %

Quarterly Results

  • Sales for period ended Mar 2021 is Rs 316.47 cr compared to Rs 250.02 cr for period ended Mar 2020, a rise of 26.6%
  • Operating Profits reported at Rs 7.24 cr for period ended Mar 2021 vis-vis 10.38 for period ended Mar 2020 .
  • Operating Margins contracted -186.4 bps for period ended Mar 2021 vis-vis Mar 2020 .
  • The EPS for Mar 2021 was Rs 1.46 compared to Rs 4.32 for previous quarter ended Dec 2020 and Rs 2.6 for Mar 2020

Profit & Loss Statement

Profit&Loss Comments

  • Company reported sales of Rs 1085.0 cr for period ended Mar 2021 vis-vis sales of Rs 1288.0 cr for the period ended Mar 2020, a fall of 18.7%. The 3 year sales cagr stood at -11.8%.
  • Operating margins shrank to 2.0% for period ended Mar 2021 vis-vis 4.0% for period ended Mar 2020, contraction of 200.0 bps.
  • Net Profit reported at Rs 26.0 cr for period ended Mar 2021 vis-vis sales of Rs 43.0 cr for the period ended Mar 2020, falling 65.4%.
  • Company reported a poor Net Profit CAGR of -30.7% over the last 3 years

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 4.0% compared to 9.0% over the last 3 Years.
    – The stock has given a return of 67% on a 1 Year basis vis-vis a return of -11% over the last 3 Years.
    – The compounded sales growth on a TTM bassis is -28% vis-vis a compounded sales growth of -4% over the last 3 Years.
    – The compounded profit growth on a TTM basis is -33% vis-vis a compounded profit growth of -21% over the last 3 Years.

    Ratios

    Shareholding Pattern

    – FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 0.39% vis-vis 0.39% for Dec 2020
    – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 34.57% vis-vis 34.57% for Dec 2020

    Conclusion

    – is almost debt free.
    -Stock is trading at 1.08 times its book value
    – has been maintaining a healthy dividend payout of 31.43% – The company has delivered a poor sales growth of -4.75% over past five years.
    – has a low return on equity of 8.53% for last 3 years.
    -Earnings include an other income of Rs.28.71 Cr.

    • The business fundamentals of the stock remain stable. Stronger near term results will build interest in the stock. We suggest to wait for a upturn in business performance.
    • Technically, the stock remains above its 50 DMA 151.07 and is trading at 167.0, thus bullish price action wise.
    • Thus, overall we retain a HOLD on the stock.

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