Meghmani Organics - Q4 FY20 (Audited –Cons)
CMP: 50
Total revenue from operations 520 Cr
558 Cr (-6.85%) YoY | 522 Cr (-0.05%) QoQ
Year ending revenue: 2,191 Cr Vs. 2,088 Cr (4.94%)
Net Profit of 57.01 Cr
77.1 Cr (-25.92%) YoY 56.7 Cr (0.59%) QoQ
Year ending Net profit: 289 Cr Vs. 295 Cr (-2.01%)
EPS (in Rs.) 2.02
2.61 YoY | 1.87 QoQ
Year ending EPS: 9.44 Vs. 9.88
View: The result is below expectations and declined. YoY and QoQ revenue and
profit both have declined. EBITDA and margin also declined.
**Business Updates & Highlights**:
The company is primarily into three main operating segments viz. Pigment –
30.6%, Agrochemicals – 44.5% and Chloro Alkali – 22.2%.
YoY topline growth for Pigment – 12.3%, Agrochemicals – 3.9% and Chloro
Alkali – (38.34)%. YoY bottom-line growth for Pigment – 78.5%,
Agrochemicals – 21% and Chloro Alkali – (76.2%).
Q4FY20 EBITDA is around INR 84 Cr Vs. 158.7 Cr in Q4FY19 Vs. 104.6 Cr in
Q3FY20, therefore, declined by 46.9% in YoY and declined by 19.2% in QoQ.
EBITDA margin in Q4FY20 is 16.1% Vs. 28.3% in Q4FY19 Vs. 19.9% in QoQ.
FY20 EBITDA is INR 433.9 Cr Vs. 528.7 Cr in FY19, therefore, declined by
16.3% in YoY. The EBITDA margin is 19.8% Vs. 25.2% in YoY.
Financial
ROE and ROCE is around INR 29% and 37% respectively and book value per
share is around INR 44 and share is currently trading at 1.1x of its book
value. Company is currently trading at annualized PE of around 5.5 which is
very fair as per industry benchmark. Promoter holding is around 51.3% in
the company which is fair and stable and increased in QoQ. FIIs hold around
1.96% and 9.3% in the company and which is slightly decreased in this
quarter, no mutual fund holding found. Cash and cash equivalent from
operating activities as of March 2020 is around INR 404 Cr Vs. 375 Cr as of
March 2019. Cash & cash equivalent as of March 20 is around INR 8.6 Cr Vs.
133 Cr as of March 2019.
Position: Share strong support price is INR 44. Long term investor may
continue with the company.
Share View: Share price high 67 (52 weeks) and now 50. Meghmani Organics
Limited is an India-based manufacturer of pigment and pesticide products.
The Company's segments include Pigments, Agro Chemicals, Basic Chemicals
and Others. The Agro Chemicals segment manufactures and distributes
technical, intermediates and formulations of insecticides.
Opportunities: Share has currently at the beaten-down value and very reasonable
PE valuation as compared to other market peers. Impressive YoY and QoQ
growth for Pigment and Agrochemicals segment and improved EBITDA in this
segment.
Risk: Chloro Alkali business segment bottom-line growth was down by more
than 75% in Q4FY20 as the same corresponding quarter bottom line was around
INR 80.7 Cr Vs. 19.5 Cr in Q4FY19 and topline also declined by more than
38%. Year ending topline growth is a single digit. Share is continuously
declined from high level 120 to 50 almost 60%.
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