Mehabe score: 2 G Factor: 3 Piotski Score: 5 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 3 and Piotski score of 5.
Description
Walchandnagar Industries is engaged in the business of Special Products,Gear Boxes,Castings and Erection, Jobwork, Services.Site:WALCHANNAGMain Symbol:WALCHANNAG
Stock trades at 70.1, below its 50dma 74.39. However it is trading above its 200dma 66.4. 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 74.39.
The 52 week high is at 92.00 and the 52week low is at 43.75
Price Chart
P/E Chart
Sales and Margin
Strengths
–
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -16.50% over past five years.
– has a low return on equity of -13.11% for last 3 years.
-Contingent liabilities of Rs.515.23 Cr.
-Promoters have pledged 98.15% of their holding.
-Earnings include an other income of Rs.25.03 Cr.
– has high debtors of 234.58 days.
-‘s cost of borrowing seems high
Competition
– The industry trades at a mean P/E of 23.5x. GMM Pfaudler trades at the industry’s max P/E of 91.2x. WALCHANNAG trades at a P/E of x
– Industry’s mean G-Factor is 3.4 while the mean Piotski score is 8.0. WALCHANNAG has a G-Factor of 3 and Piotski scoreof 5.
– Average 1 month return for industry is 4.3%. The max 1- month return was given by ISGEC Heavy: a return of 29.6 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 81.0 cr compared to Rs 60.0 cr for period ended Mar 2020, a rise of 35.0%
Company reported operating profit of Rs 2.0 cr for period ended Mar 2021, operating profit margin at 2.5 %.
Operating profit was negative for the same period last year thus company has improved its margins this year
The EPS for Mar 2021 was Rs -4.07 compared to Rs -2.03 for previous quarter ended Dec 2020 and Rs -5.82 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 326.0 cr for period ended Mar 2021 vis-vis sales of Rs 298.0 cr for the period ended Mar 2020, a growth of 8.6%. The 3 year sales cagr stood at -6.4%.
Operating margins shrank to 6.0% for period ended Mar 2021 vis-vis 12.0% for period ended Mar 2020, contraction of 600.0 bps.
Net Profit reported at Rs -57.0 cr for period ended Mar 2021 vis-vis sales of Rs -65.0 cr for the period ended Mar 2020, rising 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 71.0 cr for period ended Mar 2021 vis-vis Rs 59.0 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 -24.0% compared to -13.0% over the last 3 Years. – The stock has given a return of 30% on a 1 Year basis vis-vis a return of -19% over the last 3 Years. – The compounded sales growth on a TTM bassis is 9% vis-vis a compounded sales growth of -7% over the last 3 Years. – The compounded profit growth on a TTM basis is -2% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Jun 2021 public holding stood at 44.74% vis-vis 44.74% for Mar 2021
Conclusion
– – has low interest coverage ratio.
-The company has delivered a poor sales growth of -16.50% over past five years.
– has a low return on equity of -13.11% for last 3 years.
-Contingent liabilities of Rs.515.23 Cr.
-Promoters have pledged 98.15% of their holding.
-Earnings include an other income of Rs.25.03 Cr.
– has high debtors of 234.58 days.
-‘s cost of borrowing seems high
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 74.39 and is trading at 70.1. 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
