**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: Result is below expectation and declined. YoY and QoQ revenue and profit both have declined. EBITDA and margin also declined.
**Business Updates & Highlights**:
Company is primarily into three main operating segments viz. Pigment – 30.6%, Agrochemicals – 44.5% and Chloro Alakali – 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. 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 week) 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 beaten down value and very reasonable PE valuation as compare 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 single digit. Share is continuously declined from high level 120 to 50 almost 60%.
Disclaimer: Views are shared based on market research and study and personal in nature. Others can take the different view and opinions. Please do the thoroughly study before enter or exit the shares.