MoneyWorks4Me

Check Before You Invest : Garg Furnace Ltd

BSE: 530615 NSE: ISIN: INE194E01015
  |   Sector:  Metals & Mining   |   Industry:  Steel & Iron Products

Snapshot

Q.1 Which industry/sub-sector does Garg Furnace Ltd belong to?
Garg Furnace Ltd belongs to the Metals & Mining sector, operating specifically within the Steel & Iron Products segment.
Q.2 Is Garg Furnace Ltd a good quality company?
Garg Furnace Ltd is a weak quality company, based on a inconsistent multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Garg Furnace Ltd undervalued or overvalued?
Garg Furnace Ltd appears Fair, as its key valuation ratios are in line with their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 0-year
Historic Median
Price to Earnings 12.95 38.55
Price to Book 1.4 2.13
Price to Sales 0.48 1.20
EV to EBITDA 9.72 17.17
Q.4 Is Garg Furnace Ltd a good buy now?
Garg Furnace Ltd is not a good buy now, based on weak price trend analysis suggesting prices may fall. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

C: How much debt does the business have and is it at a sustainable level?

Q.1 Debt to Equity ratio of Garg Furnace Ltd?
Garg Furnace Ltd Debt-to-Equity ratio is 0.18, which is above the industry average of , indicating higher debt levels in the industry.

Q.2 Debt to cash flow from operations of Garg Furnace Ltd?
Garg Furnace Ltd Debt to cash flow from operations is -1.28, which is at a unhealthy level.

Ownership & governance

D: Promoter shareholding and pledge status of Garg Furnace Ltd?

Q.1 Promoter shareholding and pledge status of Garg Furnace Ltd?
Promoters hold 56.91% of the Garg Furnace Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Garg Furnace Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Garg Furnace Ltd vs industry peers?
Garg Furnace Ltd revenue CAGR is %, compared to the industry median CAGR of 0%, indicating stable growth and maintaining its market share.
Profit Metrics
Current Level 0-year
Industry Median
Revenue Growth (%) - -
Gross Profit Growth (%) - 14
Operating Profit Growth (%) - 8.8
Net Profit Growth (%) - 16.5
Operating Efficiency
Current Level 0-year
Industry Median
Asset Turnover (x) 1.79 1.15
ROE (%) - 7.17
ROCE (%) - 9.24
Cash Conversion Cycle (days) - 73

Valuation & price assessment

Q.1 Stock return of Garg Furnace Ltd over the last decade?
Over the last 9 year(s), the stock has delivered a CAGR of 35.3% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR
35.3% 61.5% 10.9% 26.6%
Q.2 Valuation ratios of Garg Furnace Ltd vs historical?
The current P/E ratio of 12.95 is lower than its historical median of 38.55, indicating that the stock is trading below its historical average valuation.
Q.3 How do the current valuation ratios compare with 0-year historical median and industry numbers?
Valuation Ratios Current 0-year
Historic Median
0-year
Industry Median
Price to Earnings 12.95 38.55 -
Price to Book 1.4 2.13 -
Price to Sales 0.48 1.20 -
EV to EBITDA 9.72 17.17 -

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