Investment Memo: SEPOWER

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Our Rating: HOLD

Mehabe score: 5
G Factor: 4
Piotski Score: 6
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 4 and Piotski score of 6.

Description

S E Power Ltd is engaged in the business of Generation of Energy through Non-Conventional Sources Manufacturing of Reclaimed Rubber.
Site: SEPOWER
Main Symbol: SEPOWER

Price Chart

Technical Analysis

• Stock trades at 26.8, above its 50dma 25.27. It also trades above its 200dma 20.67. The stock remains bullish on techicals
• The 52 week high is at 63.80 and the 52week low is at 3.37

Price Chart

P/E Chart

Sales and Margin

Strengths

– is expected to give good quarter

Weakness

– Stock is trading at 11.67 times its book value
– has low interest coverage ratio.
-Promoter holding is low: 35.60%
– has a low return on equity of -33.11% for last 3 years.
– might be capitalizing the interest cost

Competition

– The industry trades at a mean P/E of 21.8x. Indag Rubber trades at the industry’s max P/E of 56.48x. SEPOWER trades at a P/E of x
– Industry’s mean G-Factor is 3.2 while the mean Piotski score is 8.0. SEPOWER has a G-Factor of 4 and Piotski scoreof 6.
– Average 1 month return for industry is 10.2%. The max 1- month return was given by Pix Transmission: a return of 19.71 %

Quarterly Results

• Sales for period ended Dec 2021 is Rs 12.52 cr compared to Rs 7.91 cr for period ended Dec 2020, a rise of 58.3% .

.

• Company reported operating profit of Rs 0.61 cr for period ended Dec 2021 and operating profit margin at 4.9 % for same periodOperating profit was negative for the same period last year. Company has improved its margins this year.
• The EPS for quarter ended Dec 2021 is Rs -0.23 compared to Rs -0.1 for previous quarter ended Sep 2021 and Rs -0.46 for Dec 2020.

Profit & Loss Statement

Profit&Loss Comments

• Company reported sales of Rs 44.43 cr for period ended TTM vis-vis sales of Rs 23.69 cr for the period ended Mar 2021, a healthy growth of 46.7%. The 3 year sales cagr stood at 34.2%.
• Operating margins expanded to 6.3% for period ended TTM vis-vis -1.94% for period ended Mar 2021, expansion of 824.0 bps.
• Net Profit reported at Rs -5.49 cr for period ended TTM vis-vis sales of Rs -7.33 cr for the period ended Mar 2021, rising 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 -47.0% compared to -33.0% over the last 3 Years.
– The stock has given a return of 603% on a 1 Year basis vis-vis a return of 88% over the last 3 Years.
– The compounded sales growth on a TTM bassis is 120% vis-vis a compounded sales growth of 15% over the last 3 Years.
– The compounded profit growth on a TTM basis is 64% vis-vis a compounded profit growth of -12% over the last 3 Years.

Ratios

Shareholding Pattern

– FII shareholding has remained largely constant. The Mar 2022 fii holding stood at 12.21% vis-vis 12.21% for Dec 2021
– Public shareholding has remained largely constant. The Mar 2022 public holding stood at 52.19% vis-vis 52.19% for Dec 2021

Conclusion

– is expected to give good quarter – Stock is trading at 11.67 times its book value
– has low interest coverage ratio.
-Promoter holding is low: 35.60%
– has a low return on equity of -33.11% for last 3 years.
– might be capitalizing the interest cost

• 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 25.27 and is trading at 26.8, thus bullish price action wise.
• Thus, overall we retain a HOLD on the stock.

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