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Our Rating: OBSERVE & HOLD
Mehabe score: 4 G Factor: 1 Piotski Score: 4 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 4.
Description
Shrenik is engaged in the field of Trading and Processing of all kinds of Paper, Pulp, Paper Boards etc. Site:SHRENIK Main Symbol:SHRENIK
Stock trades at 4.0, above its 50dma 2.46. It also trades above its 200dma 2.49. The stock remains bullish on techicals
The 52 week high is at 4.35 and the 52week low is at 1.40
Price Chart
P/E Chart
Sales and Margin
Strengths
–
Weakness
– Stock is trading at 3.79 times its book value
– has low interest coverage ratio.
-Promoter holding has decreased over last quarter: -6.56%
-The company has delivered a poor sales growth of 2.01% over past five years.
– has a low return on equity of 10.34% for last 3 years.
-Promoters have pledged 56.79% of their holding.
-Earnings include an other income of Rs.3.28 Cr.
-Debtor days have increased from 85.20 to 143.91 days.
Competition
– The industry trades at a mean P/E of 41.4x. Adani Enterp. trades at the industry’s max P/E of 162.12x. SHRENIK trades at a P/E of x
– Industry’s mean G-Factor is 3.2 while the mean Piotski score is 8.0. SHRENIK has a G-Factor of 1 and Piotski scoreof 4.
– Average 1 month return for industry is 11.9%. The max 1- month return was given by Shrenik: a return of 110.53 %
Quarterly Results
Sales for period ended Dec 2021 is Rs 8.73 cr compared to Rs 45.26 cr for period ended Dec 2020, a fall of 80.7%
.
vis-vis 2.6 for period ended Dec 2020 .
Operating Margins expanded 2873.4 bps for period ended Dec 2021 vis-vis Dec 2020.
Company reported operating profit of Rs 3.01 cr for period ended Dec 2021 and operating profit margin at 34.5 % for same period.
The EPS for quarter ended Dec 2021 is Rs -0.02 compared to Rs -0.09 for previous quarter ended Sep 2021 and Rs -0.02 for Dec 2020.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 136.0 cr for period ended TTM vis-vis sales of Rs 364.0 cr for the period ended Mar 2021, a fall of 167.6%. The 3 year sales cagr stood at -45.4%.
Operating margins shrank to 3.0% for period ended TTM vis-vis 4.0% for period ended Mar 2021, contraction of 100.0 bps.
Net Profit reported at Rs -12.0 cr for period ended TTM vis-vis sales of Rs -1.0 cr for the period ended Mar 2021, falling 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 27.0 cr for period ended Mar 2021 vis-vis Rs 10.0 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 -2.0% compared to 10.0% over the last 3 Years. – The stock has given a return of -7% on a 1 Year basis vis-vis a return of -36% over the last 3 Years. – The compounded sales growth on a TTM bassis is -68% vis-vis a compounded sales growth of -15% over the last 3 Years. – The compounded profit growth on a TTM basis is -1562% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Conclusion
– – Stock is trading at 3.79 times its book value
– has low interest coverage ratio.
-Promoter holding has decreased over last quarter: -6.56%
-The company has delivered a poor sales growth of 2.01% over past five years.
– has a low return on equity of 10.34% for last 3 years.
-Promoters have pledged 56.79% of their holding.
-Earnings include an other income of Rs.3.28 Cr.
-Debtor days have increased from 85.20 to 143.91 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 2.46 and is trading at 4.0 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
