Mehabe score: 5 G Factor: 1 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 1 and Piotski score of 7.
Description
Ramkrishna Forgings is primarily engaged in manufacturing and sale of forged components of automobiles, railway, wagons and engineering parts.Site:RKFORGEMain Symbol:RKFORGE
Stock trades at 1186.0, above its 50dma 946.28. It also trades above its 200dma 703.73. The stock remains bullish on techicals
The 52 week high is at 1100.00 and the 52week low is at 312.60
Price Chart
P/E Chart
Sales and Margin
Strengths
– is expected to give good quarter
Weakness
– Stock is trading at 4.30 times its book value
-The company has delivered a poor sales growth of 7.26% over past five years.
– has a low return on equity of 5.89% for last 3 years.
– might be capitalizing the interest cost
-Dividend payout has been low at 1.36% of profits over last 3 years
– has high debtors of 161.08 days.
Competition
– The industry trades at a mean P/E of 28.0x. Sona BLW Precis. trades at the industry’s max P/E of 190.19x. RKFORGE trades at a P/E of 50.7x
– Industry’s mean G-Factor is 2.6 while the mean Piotski score is 7.0. RKFORGE has a G-Factor of 1 and Piotski scoreof 7.
– Average 1 month return for industry is 9.1%. The max 1- month return was given by Jayaswal Neco: a return of 28.54 %
Quarterly Results
Sales for period ended Sep 2021 is Rs 579.0 cr compared to Rs 252.0 cr for period ended Sep 2020, a rise of 129.8%
Operating Profits reported at Rs 131.0 cr for period ended Sep 2021 vis-vis 45.0 for period ended Sep 2020 .
Operating Margins expanded 476.8 bps for period ended Sep 2021 vis-vis Sep 2020 .
The EPS for Sep 2021 was Rs 13.76 compared to Rs 7.72 for previous quarter ended Jun 2021 and Rs 0.45 for Sep 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1919.0 cr for period ended TTM vis-vis sales of Rs 1289.0 cr for the period ended Mar 2021, a healthy growth of 32.8%. The 3 year sales cagr stood at -0.2%.
Operating margins expanded to 21.0% for period ended TTM vis-vis 17.0% for period ended Mar 2021, expansion of 400.0 bps.
Net Profit reported at Rs 117.0 cr for period ended TTM vis-vis sales of Rs 21.0 cr for the period ended Mar 2021, rising 82.1%.
Company reported a poor Net Profit CAGR of -0.8% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
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 2.0% compared to 6.0% over the last 3 Years. – The stock has given a return of 237% on a 1 Year basis vis-vis a return of 27% over the last 3 Years. – The compounded sales growth on a TTM bassis is 71% vis-vis a compounded sales growth of -5% over the last 3 Years. – The compounded profit growth on a TTM basis is 323% vis-vis a compounded profit growth of -39% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 16.19% vis-vis 15.55% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 30.46% vis-vis 30.16% for Mar 2021
Conclusion
– is expected to give good quarter – Stock is trading at 4.30 times its book value
-The company has delivered a poor sales growth of 7.26% over past five years.
– has a low return on equity of 5.89% for last 3 years.
– might be capitalizing the interest cost
-Dividend payout has been low at 1.36% of profits over last 3 years
– has high debtors of 161.08 days.
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 946.28 and is trading at 1186.0 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
