Mehabe score: 2 G Factor: 4 Piotski Score: 1 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 4 and Piotski score of 1.
Description
Satin Creditcare Network Limited is a non-banking finance company (NBFC), licensed by the Reserve Bank of India. It was founded in 1990 by Mr. H P Singh. The company’s offers financial requirements for excluded households at the bottom of the pyramid. Satin Creditcare Network Limited is a micro-finance institution (MFI) in the country with presence in 23 states and more than 82,000 villages.
Main Points
Reducing geographical concentration
Company seeks to limit per state exposure to <20% and per district exposure to <1% of Asset under Management. # It has reduced the concentration in one region by disbursing more loans in other regions. Uttar Pradesh once accounted for 70% of company's disbursed loans which accounts for just 22% of Gross Loan Portfolio (GLP) presently.
Other states with high concentration of GLP are Bihar (16%), Punjab (9%), Madhya Pradesh (8.7%) and West Bengal (6.5%)Site:SATINMain Symbol:SATIN
Stock trades at 90.4, above its 50dma 88.95. It also trades above its 200dma 88.08. The stock remains bullish on techicals
The 52 week high is at 112.90 and the 52week low is at 50.85
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.44 times its book value
Weakness
– has low interest coverage ratio.
-Promoter holding is low: 38.24%
– has a low return on equity of 8.95% for last 3 years.
Competition
– The industry trades at a mean P/E of 26.3x. SBI Cards trades at the industry’s max P/E of 92.21x. SATIN trades at a P/E of x
– Industry’s mean G-Factor is 4.2 while the mean Piotski score is 6.0. SATIN has a G-Factor of 4 and Piotski scoreof 1.
– Average 1 month return for industry is -0.3%. The max 1- month return was given by Bajaj Holdings: a return of 8.4 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 373.0 cr compared to Rs 375.0 cr for period ended Mar 2020, a fall of 0.5%
Operating Profits reported at Rs 152.0 cr for period ended Mar 2021 vis-vis 219.0 for period ended Mar 2020 .
Operating Margins contracted -1764.9 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 5.94 compared to Rs -11.38 for previous quarter ended Dec 2020 and Rs 1.73 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 1271.0 cr for period ended Mar 2021 vis-vis sales of Rs 1400.0 cr for the period ended Mar 2020, a fall of 10.1%. The 3 year sales cagr stood at 9.2%.
Operating margins shrank to 1.0% for period ended Mar 2021 vis-vis 227.0% for period ended Mar 2020, contraction of 22600.0 bps.
Net Profit reported at Rs -14.0 cr for period ended Mar 2021 vis-vis sales of Rs 156.0 cr for the period ended Mar 2020, falling 0%.
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 -1.0% compared to 9.0% over the last 3 Years. – The stock has given a return of 14% on a 1 Year basis vis-vis a return of -33% over the last 3 Years. – The compounded sales growth on a TTM bassis is -9% vis-vis a compounded sales growth of 9% over the last 3 Years. – The compounded profit growth on a TTM basis is -109% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has risen for the period ended Jun 2021. The Jun 2021 fii holding stood at 9.38% vis-vis 7.29% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 43.47% vis-vis 43.4% for Mar 2021
Conclusion
– Stock is trading at 0.44 times its book value – has low interest coverage ratio.
-Promoter holding is low: 38.24%
– has a low return on equity of 8.95% 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 88.95 and is trading at 90.4 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
