Mehabe score: 2 G Factor: 2 Piotski Score: 5 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 2 and Piotski score of 5.
Description
Vadivarhe Speciality Chemicals specializes in organic chemicals for a variety of uses. Its product range comprises of Intermediates, Ingredients for Personal & Hair Care products and Speciality Chemicals for API manufacturers. Site:VSCL Main Symbol:VSCL
Stock trades at 29.0, above its 50dma 23.37. It also trades above its 200dma 24.04. The stock remains bullish on techicals
The 52 week high is at 35.05 and the 52week low is at 12.60
Price Chart
P/E Chart
Sales and Margin
Strengths
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Weakness
– Stock is trading at 3.40 times its book value
– has low interest coverage ratio.
-The company has delivered a poor sales growth of 0.14% over past five years.
– has a low return on equity of -20.16% for last 3 years.
– might be capitalizing the interest cost
-Promoters have pledged 100.00% of their holding.
Competition
– The industry trades at a mean P/E of 26.8x. Pidilite Inds. trades at the industry’s max P/E of 96.17x. VSCL trades at a P/E of x
– Industry’s mean G-Factor is 2.9 while the mean Piotski score is 8.0. VSCL has a G-Factor of 2 and Piotski scoreof 5.
– Average 1 month return for industry is -8.4%. The max 1- month return was given by Vadivarhe Speci.: a return of 6.43 %
Quarterly Results
Sales for period ended Dec 2021 is Rs 5.71 cr compared to Rs 4.37 cr for period ended Dec 2020, a rise of 30.7% .
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Company reported negative operating profit of Rs -2.39 cr for period ended Dec 2021. For same period last year, operating profit was -0.25.
The EPS for quarter ended Dec 2021 is Rs -2.27 compared to Rs -1.68 for previous quarter ended Sep 2021 and Rs -0.73 for Dec 2020.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 23.77 cr for period ended TTM vis-vis sales of Rs 26.47 cr for the period ended Mar 2021, a fall of 11.4%. The 3 year sales cagr stood at -9.8%.
Operating margins shrank to -20.53% for period ended TTM vis-vis -2.04% for period ended Mar 2021, contraction of 1849.0 bps.
Net Profit reported at Rs -7.52 cr for period ended TTM vis-vis sales of Rs -2.76 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 stock has given a return of 81% 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 1% over the last 3 Years. – The compounded profit growth on a TTM basis is -272% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Conclusion
– – Stock is trading at 3.40 times its book value
– has low interest coverage ratio.
-The company has delivered a poor sales growth of 0.14% over past five years.
– has a low return on equity of -20.16% for last 3 years.
– might be capitalizing the interest cost
-Promoters have pledged 100.00% of their holding.
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 23.37 and is trading at 29.0 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
