Mehabe score: 2 G Factor: 2 Piotski Score: 3 The stock has a rating SELL. 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 2 and Piotski score of 3.
Description
South Indian Bank in India and provides retail and corporate banking, para banking activities such as debit card, third party financial product distribution, in addition to Treasury and Foreign Exchange Business.#
Main Points
Ratios
Capital Adequacy Ratio – 14.47%
Net Interest Margin – 2.64%
Gross NPA – 4.90%
Net NPA – 2.12%
CASA Ratio – 27.93%Site:SOUTHBANKMain Symbol:SOUTHBANK
Stock trades at 11.0, below its 50dma 11.55. However it is trading above its 200dma 9.73. The stock remains weak in the short term due to near term bearish momentum. However overall bullish structure remains intact. Price action will further build up as it moves above its dma50, currently situated at 11.55.
The 52 week high is at 13.95 and the 52week low is at 6.12
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.42 times its book value
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-The company has delivered a poor sales growth of 5.62% over past five years.
– has a low return on equity of 2.56% for last 3 years.
-Contingent liabilities of Rs.12508.48 Cr.
– might be capitalizing the interest cost
-Earnings include an other income of Rs.1353.58 Cr.
-Dividend payout has been low at 6.09% of profits over last 3 years
Competition
– The industry trades at a mean P/E of 19.6x. Kotak Mah. Bank trades at the industry’s max P/E of 33.86x. SOUTHBANK trades at a P/E of x
– Industry’s mean G-Factor is 3.2 while the mean Piotski score is 6.0. SOUTHBANK has a G-Factor of 2 and Piotski scoreof 3.
– Average 1 month return for industry is -4.7%. The max 1- month return was given by ICICI Bank: a return of 4.38 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 1633.0 cr compared to Rs 1887.0 cr for period ended Jun 2020, a fall of 13.5%
Operating Profits reported at Rs 981.0 cr for period ended Jun 2021 vis-vis 761.0 for period ended Jun 2020 .
Operating Margins expanded 1974.5 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 0.05 compared to Rs 0.03 for previous quarter ended Mar 2021 and Rs 0.45 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 7052.0 cr for period ended TTM vis-vis sales of Rs 7305.0 cr for the period ended Mar 2021, a fall of 3.6%. The 3 year sales cagr stood at 0.8%.
Operating margins shrank to -1363.0% for period ended TTM vis-vis -1099.0% for period ended Mar 2021, contraction of 26400.0 bps.
Net Profit reported at Rs -9.0 cr for period ended TTM vis-vis sales of Rs 62.0 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 5808.0 cr for period ended Mar 2021 vis-vis Rs 656.0 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 had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 1.0% compared to 3.0% over the last 3 Years. – The stock has given a return of 58% on a 1 Year basis vis-vis a return of -15% over the last 3 Years. – The compounded sales growth on a TTM bassis is -9% vis-vis a compounded sales growth of 6% over the last 3 Years. – The compounded profit growth on a TTM basis is -108% vis-vis a compounded profit growth of -43% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 7.03% vis-vis 7.27% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 75.97% vis-vis 74.69% for Mar 2021
Conclusion
– Stock is trading at 0.42 times its book value – Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-The company has delivered a poor sales growth of 5.62% over past five years.
– has a low return on equity of 2.56% for last 3 years.
-Contingent liabilities of Rs.12508.48 Cr.
– might be capitalizing the interest cost
-Earnings include an other income of Rs.1353.58 Cr.
-Dividend payout has been low at 6.09% of profits over last 3 years
Fundamentally, the stock remains weak. The business fundamentals are on shaky ground. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock reflects the poor fundamentals. The stock remains below its 50 DMA 11.55 and is trading at 11.0. It has shown near term lack of bullish momentum. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
