Mehabe score: 1 G Factor: 4 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 4 and Piotski score of 4.
Description
SRG Housing Finance business of providing loans to Retail customers for construction, repair, renovation or purchase of residential property and loans against property. Site:SRGHFL Main Symbol:SRGHFL
Stock trades at 150.0, above its 50dma 145.46. However it is trading below its 200dma 157.06. The stock remains weak though short term bullish momentum supports price action. It needs to close above 157.06 for bullish price action to continue
The 52 week high is at 240.00 and the 52week low is at 128.25
Price Chart
P/E Chart
Sales and Margin
Strengths
– has delivered good profit growth of 58.71% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 25.80%
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
Competition
– The industry trades at a mean P/E of 26.3x. Aptus Value Hou. trades at the industry’s max P/E of 84.47x. SRGHFL trades at a P/E of 10.2x
– Industry’s mean G-Factor is 3.5 while the mean Piotski score is 7.0. SRGHFL has a G-Factor of 4 and Piotski scoreof 4.
– Average 1 month return for industry is 3.0%. The max 1- month return was given by Can Fin Homes: a return of 10.03 %
Quarterly Results
Sales for period ended Dec 2021 is Rs 19.6 cr compared to Rs 20.5 cr for period ended Dec 2020, a fall of 4.4%
.
vis-vis 5.58 for period ended Dec 2020 .
Operating Margins expanded 150.5 bps for period ended Dec 2021 vis-vis Dec 2020.
Company reported operating profit of Rs 5.63 cr for period ended Dec 2021 and operating profit margin at 28.7 % for same period.
The EPS for quarter ended Dec 2021 is Rs 3.67 compared to Rs 4.39 for previous quarter ended Sep 2021 and Rs 4.38 for Dec 2020.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 75.0 cr for period ended TTM vis-vis sales of Rs 77.0 cr for the period ended Mar 2021, a fall of 2.7%. The 3 year sales cagr stood at 8.9%.
Operating margins shrank to 23.0% for period ended TTM vis-vis 26.0% for period ended Mar 2021, contraction of 300.0 bps.
Net Profit reported at Rs 18.0 cr for period ended TTM vis-vis sales of Rs 19.0 cr for the period ended Mar 2021, falling 5.6%.
Company recorded a Net Profit CAGR of 6.3% over the last 3 years
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 22.0% compared to 26.0% over the last 3 Years. – The stock has given a return of -11% on a 1 Year basis vis-vis a return of -12% over the last 3 Years. – The compounded sales growth on a TTM bassis is 6% vis-vis a compounded sales growth of 31% over the last 3 Years. – The compounded profit growth on a TTM basis is 11% vis-vis a compounded profit growth of 33% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Dec 2021 fii holding stood at 0.14% vis-vis 0.42% for Sep 2021 – Public shareholding has remained largely constant. The Dec 2021 public holding stood at 34.91% vis-vis 34.63% for Sep 2021
Conclusion
– has delivered good profit growth of 58.71% CAGR over last 5 years
– has a good return on equity (ROE) track record: 3 Years ROE 25.80% – Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
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 145.46 and is trading at 150.0 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
