Mehabe score: 2 G Factor: 1 Piotski Score: 3 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 3.
Description
Shriram EPC is engaged to provides end-to-end solutions to engineering challenges, offering multi disciplinary design, engineering, procurement, construction and project management services.Site:SHRIRAMEPCMain Symbol:SHRIRAMEPC
Stock trades at 6.7, above its 50dma 5.23. It also trades above its 200dma 4.85. The stock remains bullish on techicals
The 52 week high is at 7.00 and the 52week low is at 3.35
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.65 times its book value
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of 1.25% over past five years.
-Promoter holding is low: 28.76%
– has a low return on equity of -4.05% for last 3 years.
-Contingent liabilities of Rs.636.98 Cr.
-Promoters have pledged 64.48% of their holding.
– has high debtors of 213.49 days.
Competition
– The industry trades at a mean P/E of 16.1x. Engineers India trades at the industry’s max P/E of 37.74x. SHRIRAMEPC trades at a P/E of x
– Industry’s mean G-Factor is 2.8 while the mean Piotski score is 7.0. SHRIRAMEPC has a G-Factor of 1 and Piotski scoreof 3.
– Average 1 month return for industry is -3.0%. The max 1- month return was given by Larsen & Toubro: a return of 9.54 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 67.0 cr compared to Rs 127.0 cr for period ended Jun 2020, a fall of 47.2%
Company reported negative operating profit of Rs -11.0 cr for period ended Jun 2021. For same period last year, operating profit was -9.0
The EPS for Jun 2021 was Rs -0.37 compared to Rs -0.6 for previous quarter ended Mar 2021 and Rs -0.31 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 522.0 cr for period ended TTM vis-vis sales of Rs 583.0 cr for the period ended Mar 2021, a fall of 11.7%. The 3 year sales cagr stood at -24.3%.
Operating margins shrank to -15.0% for period ended TTM vis-vis -10.0% for period ended Mar 2021, contraction of 500.0 bps.
Net Profit reported at Rs -185.0 cr for period ended TTM vis-vis sales of Rs -179.0 cr for the period ended Mar 2021, 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 -15.0% compared to -4.0% over the last 3 Years. – The stock has given a return of 91% on a 1 Year basis vis-vis a return of -18% over the last 3 Years. – The compounded sales growth on a TTM bassis is -45% vis-vis a compounded sales growth of -11% over the last 3 Years. – The compounded profit growth on a TTM basis is -266% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Sep 2021 fii holding stood at 0.0% vis-vis 0.0% for Jun 2021 – Public shareholding has risen for the period ended Sep 2021. The Sep 2021 public holding stood at 12.96% vis-vis 10.1% for Jun 2021
Conclusion
– Stock is trading at 0.65 times its book value – has low interest coverage ratio.
-The company has delivered a poor sales growth of 1.25% over past five years.
-Promoter holding is low: 28.76%
– has a low return on equity of -4.05% for last 3 years.
-Contingent liabilities of Rs.636.98 Cr.
-Promoters have pledged 64.48% of their holding.
– has high debtors of 213.49 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 5.23 and is trading at 6.7 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
