I.S.T. Ltd. : Neutral outlook but great fundamentals

I.S.T. Ltd. relative valuation is now NEUTRAL. It was previously rated UNDERVALUED, and has a fundamental analysis score of 78.

Our analysis is based on comparing I.S.T. Ltd. with the following peers – Kuroda Precision Industries Ltd., Shanghai Prime Machinery Co., Ltd. Class H, Amplefield Limited, Jubilee Industries Holdings Ltd., Single Point Parts (Thailand) Public Co., Ltd. NVDR, Sundram Fasteners Limited and Bharat Forge Ltd (7726-JP, 2345-HK, AOF-SG, 5OS-SG, SPPT.R-TH, 500403-IN and 500493-IN).

Relative Valuation

I.S.T. Ltd. is currently neutrally valued, as its previous close of INR 450 lies within the CapitalCube estimate range of INR 434.56 to INR 525.34. Over the last 52 week period, I.S.T. Ltd. has fluctuated between INR 213.50 and INR 470.

Relative Valuation

Company Overview

  • Relative outperformance over the last year has faded more recently.
  • I.S.T. Ltd. currently trades at a higher Price/Book ratio (0.83) than its peer median (0.60).
  • We classify 508807-IN as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
  • 508807-IN‘s relatively high profit margins are burdened by relative asset inefficiency.
  • Change in the company’s annual revenues seems to be coming at the expense of earnings.
  • 508807-IN‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • While 508807-IN‘s revenue growth in recent years has been above the peer median, the stock’s PE ratio is less than the peer median suggesting that the company’s earnings may be peaking and the market expects a decline in its growth expectations.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • 508807-IN has the financial and operating capacity to borrow quickly.

Investment Outlook

I.S.T. Ltd. has a fundamental score of 78 and has a relative valuation of NEUTRAL.

I.S.T. Ltd. is on the top left quadrant of the CapitalCube Value – Price Matrix. We classify this space a ‘Value Play’. Here, I.S.T. Ltd. is potentially undervalued, since it trades below its CapitalCube Implied Price of 479.95. At the same time, I.S.T. Ltd. is also fundamentally strong with a score of 78. This is a classic value stock definition.

Fundamentals Vs Relative Valuation

Drivers of Valuation

508807-IN has a Harvesting profile relative to its peers.

We classify 508807-IN as Harvesting because of the market’s low expectations of growth (PE of 2.27 compared to peer median of 10.90) despite its relatively high returns (ROE of 19.43% compared to the peer median ROE of 5.96%).

The company currently trades at a higher Price/Book ratio of 0.83 compared to its peer median of 0.60.

Valuation Drivers

508807-IN has maintained its Harvesting profile from the prior year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

I.S.T. Ltd. manufactures high precision auto components. The company engages in the manufacturing, marketing and distribution of components for automotive, white goods, consumer goods and dental and orthopedic implants industries. Its products include automotive transmission parts; carburetor parts; fuel injection equipment and parts; precision components and assemblies for communication equipment and office products. The company was founded on August 9, 1976 and headquartered in New Delhi, India.

Disclaimer

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