Basic Filtering Criteria:
If you apply the stock filter for a price
to earnings ratio of 1-10 this stock will not be caught in the net at all and
therefore as per our value investing filtering criteria this stock is not worth
further investigation at all.
Still this research report for Pricol
Ltd. was prepared since one of our readers had specifically queried about this
stock. Therefore we go ahead and gather further information that is readily
available on many financial websites, which depicts as follows:
Basic Filtering Criteria:
|
Importance
|
Minimum Required
|
Prcol Ltd.
|
Pass/ Fail
|
|
Turnover (Rs. Crore/
Rs. 10 million)
|
Basic
|
1000
|
1126.51
|
✔
|
|
2
|
Market Capitalization (Rs. Crore/
Rs. 10 million)
|
Basic
|
1000
|
1048.01
|
✔
|
3
|
Price to Earnings Ratio
|
Critical
|
Less
than 10
|
24.26
|
✖
|
4
|
Price to Book Value
|
Critical
|
Less
than 1.5
|
3.36
|
✖
|
5
|
Dividend Yield
|
Critical
|
4-5%
|
0.90%
|
✖
|
6
|
Uninterrupted Dividend Payment Record
|
Critical
|
Minimum
10 years
|
Skipped
in the years 2015 and 2009
|
✖
|
Again it shows that the market conditions
for Pricol’s shares are not favorable as all the four critical criteria are not met.
A value investor need not undertake any
further investigation and waste valuable time.
Still we do the review purely for
academic purposes and comparison with the shares listed on our ‘Portfolio
Y2K15’.
A. Company Performance
Profitability Analysis:
We present here in
this brief company report five-year data as follows:
Mar'16
|
Mar'15
|
Mar'14
|
Mar'13
|
Mar'12
|
|
Net
Sales
|
1126.51
|
949.66
|
891.15
|
873.89
|
964.94
|
Total
Expenditure
|
1019.86
|
926.38
|
825.34
|
813.46
|
891.21
|
Operating
Profit
|
106.65
|
23.29
|
65.81
|
60.44
|
73.73
|
EBITDA
|
113.65
|
25.29
|
69.44
|
61.95
|
75.88
|
EBITDA
%
|
10.09%
|
2.66%
|
7.79%
|
7.09%
|
7.86%
|
Depreciation
|
34.17
|
35.26
|
30.66
|
31.95
|
29.19
|
Other
Write-offs
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
EBIT
|
79.48
|
-9.96
|
38.77
|
30.00
|
46.69
|
Interest
|
9.31
|
7.89
|
6.52
|
16.33
|
29.79
|
EBT
|
70.17
|
-17.86
|
32.25
|
13.67
|
16.90
|
EBT
%
|
6.23%
|
-1.88%
|
3.62%
|
1.56%
|
1.75%
|
Taxes
|
16.95
|
-4.54
|
16.89
|
-2.07
|
9.90
|
Profit
and Loss for the Year
|
53.21
|
-13.32
|
15.37
|
15.74
|
7.00
|
Non
Recurring Items
|
-10.02
|
-4.68
|
51.63
|
0.00
|
49.42
|
PAT
|
43.20
|
-18.00
|
67.00
|
15.74
|
56.42
|
PAT
%
|
3.83%
|
-1.90%
|
7.52%
|
1.80%
|
5.85%
|
Highlights:
- Very low and unhealthy EBDITA, EBT and PAT Margins;
- Total Operating Expenses indicates quite an ordinary vulnerable business model;
- Inconsistent performance with negative EBT margin in the year 2015;
- Interest costs are not very high
Balance Sheet Analysis:
Particulars
(Rs. Crore/ Rs. 10
million)
|
Mar'16
|
Mar'15
|
Mar'14
|
Mar'13
|
Mar'12
|
Liabilities
|
12 Months
|
12 Months
|
12 Months
|
12 Months
|
12 Months
|
Share Capital
|
9.48
|
9.48
|
9.45
|
11.03
|
11.03
|
Reserves &
Surplus
|
289.85
|
258.06
|
311.33
|
245.53
|
234
|
Net Worth
|
299.33
|
267.54
|
320.78
|
256.55
|
245.02
|
Secured Loan
|
33.33
|
20.01
|
33.94
|
50.26
|
76.76
|
Unsecured Loan
|
0
|
34
|
10
|
0
|
3.44
|
TOTAL LIABILITIES
|
332.66
|
321.55
|
364.73
|
306.81
|
325.23
|
Assets
|
|||||
Gross Block
|
451.21
|
447.1
|
493.55
|
502.78
|
491.14
|
(-) Acc.
Depreciation
|
277.21
|
274.89
|
314.31
|
322.03
|
301.37
|
Net Block
|
174
|
172.22
|
179.25
|
180.75
|
189.77
|
Capital Work in
Progress
|
6.45
|
3.85
|
1.73
|
2.6
|
1.54
|
Investments
|
95.65
|
52.97
|
60.38
|
38.8
|
30.24
|
Inventories
|
115.73
|
108.28
|
96.6
|
106.25
|
133.79
|
Sundry Debtors
|
200.19
|
164.47
|
158.97
|
163.96
|
180.09
|
Cash and Bank
|
6.47
|
6.76
|
3.78
|
2.21
|
68.47
|
Loans and Advances
|
38.46
|
50.62
|
82.04
|
74.51
|
72.78
|
Total Current Assets
|
360.85
|
330.14
|
341.39
|
346.93
|
455.13
|
Current Liabilities
|
265.29
|
220.08
|
205.91
|
250.83
|
324.33
|
Provisions
|
39.01
|
17.54
|
12.12
|
11.44
|
27.13
|
Total Current
Liabilities
|
304.3
|
237.62
|
218.03
|
262.27
|
351.46
|
NET CURRENT ASSETS
|
56.56
|
92.52
|
123.36
|
84.66
|
103.67
|
Misc. Expenses
|
0
|
0
|
0
|
0
|
0
|
TOTAL
ASSETS(A+B+C+D+E)
|
332.66
|
321.55
|
364.73
|
306.81
|
325.23
|
Current Ratio Actual
|
1.19
|
1.39
|
1.57
|
1.32
|
1.29
|
Quick Ratio
|
0.81
|
0.93
|
1.12
|
0.92
|
0.91
|
TOL/ TNW
|
1.13
|
1.09
|
0.82
|
1.22
|
1.76
|
Highlights:
- Very low current and quick ratios (minimum required being 2 and 1 respectively) indicating weak liquidity position of the company.
- TOL/ TNW being below 3 is satisfactory.
- Low levels of debt is satisfactory.
Cash Flow Analysis:
Cash Flow
|
|||||
(Rs. Crore/ Rs. 10 million)
|
|||||
Particulars
|
Mar'16
|
Mar'15
|
Mar'14
|
Mar'13
|
Mar'12
|
Profit Before Tax
|
60.15
|
22.53
|
83.88
|
13.67
|
66.32
|
Net Cash Flow from Operating Activity
|
115.4
|
30.16
|
58.94
|
59.58
|
89.83
|
Net Cash Used in Investing Activity
|
-92
|
-31.72
|
4.67
|
-31.76
|
47.71
|
Net Cash Used in Financing Activity
|
-23.69
|
2.95
|
-62.04
|
-94.07
|
-78.38
|
Net Inc/Dec In Cash and Cash Equivalent
|
-0.29
|
1.39
|
1.57
|
-66.26
|
59.16
|
Cash and Cash Equivalent - Beginning of the Year
|
1.96
|
1.37
|
0.33
|
67.65
|
-3.83
|
Cash and Cash Equivalent - End of the Year
|
1.67
|
2.76
|
1.9
|
1.4
|
55.32
|
Highlights:
Company is
generating positive but low
net operating cash flows.
Cash
Flow analysis reveals a very average performance and nothing to boast about.
Dividend History:
Dividends Track Record
|
|||
Announcement Date
|
Effective Date
|
Dividend Type
|
Dividend (%)
|
30/05/2016
|
11/08/2016
|
Final
|
100%
|
29/05/2014
|
30/07/2014
|
Final
|
40%
|
25/07/2013
|
06/08/2013
|
Interim
|
40%
|
29/05/2013
|
07/06/2013
|
Final
|
40%
|
29/05/2012
|
26/07/2012
|
Final
|
80%
|
31/05/2011
|
11/08/2011
|
Final
|
60%
|
31/05/2010
|
15/07/2010
|
Final
|
40%
|
30/05/2008
|
24/07/2008
|
Final
|
60%
|
30/05/2007
|
18/07/2007
|
Final
|
100%
|
29/05/2006
|
18/07/2006
|
Final
|
100%
|
24/05/2005
|
18/07/2005
|
Final
|
100%
|
22/05/2004
|
07/06/2004
|
Final
|
90%
|
27/05/2003
|
30/07/2003
|
Final
|
60%
|
21/05/2002
|
12/08/2002
|
Final
|
35%
|
31/05/2001
|
02/07/2001
|
Final
|
40%
|
29/03/2000
|
Interim
|
40%
|
|
28/05/1999
|
Final
|
30%
|
|
26/05/1998
|
Final
|
35%
|
|
20/05/1997
|
Final
|
35%
|
|
- Company has skipped paying dividends in the years 2009 and 2015.
- Even though the percentage of dividends declared appear to be handsome, the fact remains that the face value of the share being just Rs.1, the dividend per share is just Rs.1 or in paise. This combined with very high market price of Rs.110.60; the dividend yield is unacceptably low.
Dividend Coverage from non-operating income
Dividend
|
0.00
|
6.28
|
2.99
|
6.03
|
Net Non-Operating Income
|
0
|
0
|
0
|
0
|
Dividend Coverage from Non-Operating Income
|
0
|
0
|
0
|
0
|
The company does
not earn any non-operating income. This is a weakness as for paying dividends
there is no back up or nothing to fall back upon other than operating profits.
That’s why in 2015, when the company had incurred a loss, no dividend was paid.
On this parameter the company’s
performance is highly un-satisfactory.
B.Market Condition:
Price to Earnings Ratio:
At the current
market price of Rs.110.60 and Earnings Per Share (EPS) of Rs.4.56 (based on
2016 results) the PE Ratio is 24.26, well above the recommended 10.
The
market condition as far is this parameter is concerned is not
favorable.
Price to Book Value per Share:
With a book value
of Rs.28.09 for the financial year 2015-16 and a price of Rs.110.6, the price to book ratio stands unfavorably well above
the recommended maximum of 1.5, at 3.36.
On
this parameter the market condition is unfavorable.
Dividend Yield:
We have already
seen that Pricol Ltd., is not in a comfortable position to pay uninterrupted
dividends. With a low pershare dividend of Rs.1 and a high market price of
Rs.110.60, the dividend yield works out to a meager 0.90%
On
this parameter the market condition is highly unfavorable.
Distance from 52 week high:
The 52-week high for
this share is Rs.124.40 and the current market price is Rs.110.60. The distance
to 52-weel high is Just Rs.13.80 or a mere 11.09% away from the 52 week high.
The
market condition as far is this parameter is concerned is also not
favorable.
Five year Returns:
The five-year
return (return measured by change in share price) is 600%. Which means that
today’s CMP of the scrip has already appreciated 6 times in the last five years
and there is very little possibility for further upside and there is a great
possibility that the price may fall steeply back to its five year low in case
of a major market crash.
On
this parameter the market condition is highly unfavorable.
C. Conclusion:
The company’s performance as well as
the market conditions of the shares of Pricol Ltd. are clearly unfavorable and
the share does not merit inclusion in any value investor’s portfolio.
Post Disclaimer: Opinions expressed here are the author’s personal opinions. Market conditions have a great bearing on many end results discussed in this report. No disrespect is intended towards the company, it’s management. Investors are advised not rely blindly on the opinions expressed herein but to exercise their own judgment. Neither the author nor the blog shall be responsible for any loss suffered by either acting or not acting based on the opinions expressed herein.
Post Disclaimer: Opinions expressed here are the author’s personal opinions. Market conditions have a great bearing on many end results discussed in this report. No disrespect is intended towards the company, it’s management. Investors are advised not rely blindly on the opinions expressed herein but to exercise their own judgment. Neither the author nor the blog shall be responsible for any loss suffered by either acting or not acting based on the opinions expressed herein.
