In this article, we will explore the exciting journey into the Olectra Greentech future and its compelling roadmap towards sustainable solutions through a thorough fundamental and financial analysis of the company’s stock.
Olectra Greentech Ltd– About The Company
Olectra Greentech Ltd. is a holding company, which engages in the manufacturing of composite polymer insulators and electrical buses. It operates through the Insulator Division and E-Bus Division segments. It is a leader in the field of clean transport, has been making outstanding progress in modernising how we move. They have become a major force in the effort for a better tomorrow because to their unwavering commitment to environmental sustainability. With the use of innovative technologies, Olectra Greentech is at the forefront of efforts to restructure the transportation industry as the globe struggles with the problems of pollution and climate change.
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industry trends: Future of Automobile Industry in India
India enjoys a strong position in the global heavy vehicles market as it is the largest tractor producer, second-largest bus manufacturer, and third-largest heavy truck manufacturer in the world. India’s annual production of automobiles in FY22 was 22.93 million vehicles. The Indian automobile industry contributes almost 6.4% of India’s GDP and 35% of manufacturing GDP and is a leading employment provider.
IBEF Report: the Department of Commerce, Ministry of Commerce and Industry, Government of India.
Looking ahead, India holds immense potential to become a leader in shared mobility by 2030. This opens up exciting opportunities for the integration of electric and autonomous vehicles into the transportation landscape. As the world moves towards sustainable and technologically advanced mobility solutions, India has the chance to seize the spotlight and shape the future of transportation.
In terms of investments, the automobile sector has been attracting significant attention. Between April 2000 and September 2022, the industry has received a cumulative equity Foreign Direct Investment (FDI) inflow of about US$ 33.77 billion. This highlights the confidence and interest of global investors in India’s automotive market. The Government of India expects the automobile sector to attract US$ 8-10 billion in local and foreign investments by 2023.
Indian automotive industry is targeting to increase the export of vehicles by five times during 2016-26. In FY22, total automobile exports from India stood at 5,617,246. In response to the escalating demand, numerous automotive manufacturers have made substantial investments across various sectors of the industry in recent months. Among the leading companies, Olectra Greentech has emerged as a key player, investing significantly to meet the evolving needs of the market.
Day to Day News
“PM Modi’s Rs 576 Billion e-Bus Plan: A Boost for Clean Transport”
Prime Minister Modi’s new plan will bring 10,000 e-buses through a special partnership. This was first mentioned by Finance Minister Sitharaman in February 2021. It will cost about Rs 576 billion. The government will help with Rs 200 billion over 10 years. Bus operators will get paid a fixed amount for every kilometer they drive. This is different from the earlier plan, which promised Rs 21 for each kilometer for 12 years. This plan means cleaner cities and more jobs in the electric bus industry.
Well, you know what happened next – investors got pretty pumped about this. Shares of companies that are expected to play a big part in making these electric buses shot up. Olectra Greentech’s shares went up by 8.8%, and JBM Auto had an even bigger boost, with a 10.1% rise.
This whole thing shows just how much everyone believes in the potential of electric vehicles.
olectra greentech future: Essentials And Financials
Olectra Greentech has achieved an impressive operating revenue of Rs. 1,090.76 Cr. over the past twelve months, showcasing a remarkable annual revenue growth rate of 83%. It maintains favorable profitability ratios, with a ROCE of 13.3% and a ROE of 8.11%. However, it’s worth noting that the Price to Earning Ratio is 165.1, which is higher than the sector PE ratio of 45.3. On a positive note, the Trailing Twelve Month EPS is positive and exhibits growth, currently standing at 8.05 Rs per share, reflecting a significant year-on-year growth rate of +86.91%. These indicators provide optimistic signals for the company’s performance and prospects.
While a high PE ratio of this level must be a reason to worry but the good news is that the company has been experiencing substantial leaps in net profit and has delivered good profit growth of 49.1% CAGR over last 5 years. An important point to consider is that relation between growing EPS and a high PE is inverse. That is, in few years we can expect that the PE of the company will decrease significantly in response to growing earnings of the company.
Debt to Equity Ratio of 0.2 is less than 1 and healthy. This implies that its assets are financed mainly through equity. The current year dividend for Olectra Greentech is Rs 0.40 and the yield is 0.03 %.
As of the June 2023 quarter, the promoters’ holding in the company stands unchanged at 50.02%. However, FII/FPI have reduced their holdings from 9.03% to 8.55% during the same period. Meanwhile, mutual funds’ holding remains stable at 0.06%. Institutional investors have also decreased their holdings from 9.14% to 8.66% in the June 2023 quarter.
Evaluating Financial Statements
Profit & Loss | Income Statements
Over the last 10 years, Olectra Greentech has truly experienced remarkable growth. Back in March 2013, their sales revenue was a modest 70 crores, but fast forward to March 2023, and it has skyrocketed to an incredible 1,091 crores. That’s an outstanding rise of around 1,458.57% during this period!
The best part is that the company’s expenses have been consistently lower than its revenues throughout these 10 years, which is an excellent sign of efficient financial management. Speaking of operating profit, it has also seen impressive growth, going up from 11 crores to 141 crores, albeit with some minor fluctuations in between.
But the real showstopper here is the tremendous rise in the company’s net profit. From a humble 2 crores in March 2013, it has soared to a whopping 67 crores in March 2023. That’s an incredible surge of around 3,250%! It’s safe to say that Olectra Greentech has not only grown generously but also thrived magnificently over the past decade.
Earnings per share (EPS) serves as a valuable indicator for investors, revealing the amount of profit a company generates per outstanding share. A rising EPS often signifies a positive trend. In the case of Olectra Greentech, its EPS has experienced growth over the past 10 years, with some minor fluctuations, and currently stands at an encouraging 7.99 Rs. per share.
On the other hand, the company’s dividend payout has been less consistent, fluctuating in recent years, and currently stands at 5%.
Overall, these figures reflect Olectra Greentech’s exceptional growth and financial performance, making it an exciting and promising company to watch in the green technology sector.
Cash Flows Statements
The table shows that the cash flows of Olectra Greentech is negative and falling or overall highly fluctuating in a span of 10 years. Similarly cash flows from operating activities which help investors understand how well a company generates cash from its core business activities is also fluctuating. The company has not even revealed the data for its March 2023 fiscal.
Cash flow statements reveal the actual cash position of a company, which may differ from its profitability reported in the income statement. A company can be profitable, yet face cash shortages if it does not collect its receivables or manages its expenses poorly. It allow investors to compare companies of different sizes and industries more accurately, as they focus on cash movements rather than accounting adjustments.
The viability of the firm may be threatened by continuously negative cash flows. If the problem persists, it may be in danger of moving for bankruptcy or becoming insolvent. Negative cash flows can be a short-term problem that is frequently related to difficulties in the near term and can be resolved through strategic management. To resist the trend, businesses may need to reevaluate their company plans, maximise working capital, cut costs, improve efficiency, and look for new sources of income.
A complete analysis of olectra greentech future should be done by investors and stakeholders, taking into account other financial metrics including profitability, debt levels, and operating performance. The company’s overall financial health and potential risks will be better understood because of this thorough approach. In order to make wise judgements and assess the company’s long-term survival, it is crucial to go beyond just the company’s negative cash flows.
Analyzing Key Performance Indicators
Profitability Ratios
The company’s ROE, which is currently 4.84%, has been comparatively low during the past three years. The ROCE, which had a rate of 4.81% during the same time period, had also been subpar. These numbers imply that the company’s profitability and capital utilisation efficiency have had difficulties throughout this period.
Over the past three years, the company has demonstrated commendable profit growth of 66.67% and achieved a solid revenue growth of 26.34%. These figures reflect the company’s positive performance and success in expanding its business.
The company’s PEG ratio, which stands at 0.79, indicates that it is considered a good investment opportunity. This ratio takes into account both the company’s growth prospects and its current stock P/E, providing valuable insights for investors.
Additionally, the company’s efficient Cash Conversion Cycle of 84.03 days indicates that it effectively manages its working capital and cash flow. This demonstrates the company’s ability to convert its inventory and receivables into cash efficiently, which is essential for maintaining financial stability and smooth operations.
Highlighting Important Aspects | Limitations Of Olectra Greentech future
The corporation is significantly more in the market than what the company’s accounting books indicate since the stock is now selling at 12.8 times its book value.
The firm has been having trouble the past three years due to its low return on equity , which is currently at 4.84%. This indicates that the firm has not made significant earnings relative to the capital invested by its owners.
Another issue is that it takes the business 211 days or more to recover money from clients due to its high debtor ratio. The company’s working capital management and cash flow may be impacted by this protracted collecting period.
Furthermore, it appears that the cost of financing for the business is considerable. Additionally, its P/E ratio of 161.3 is significantly greater than the average P/E ratio for its industry, which is 47.2. This high P/E ratio shows that the market values the company’s profits more than those of its competitors in the same industry.
olectra greentech Future: SWOT Analysis
A Closer Look At Company’s Annual Income Statement
Annual Revenue rose 83.2%, in the last year to Rs 1,100.8 Crores. Annual Net Profit rose 89.2% in the last year to Rs 66.9 Crores. Stock Price rose 111.7% and outperformed its sector by 79.4% in the past year. Quarterly Net profit rose 54.7% YoY to Rs 27.5 Crores.
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BOTTOM LINE
In summary, Olectra Greentech’s future roadmap towards sustainable solutions promises an exciting journey filled with innovative technologies and environmentally friendly mobility solutions. With the potential to lead in shared mobility by 2030 and a strong focus on electric and autonomous vehicles, the company positions itself at the forefront of the green technology revolution.
While their operating revenue has seen remarkable growth and investors have shown interest with significant FDI inflows, it’s crucial to conduct a fundamental and financial analysis of the company’s stock before considering investments. Understanding metrics like ROCE, ROE, and the PEG ratio can provide insights into the company’s financial health and potential for growth.
As Olectra Greentech future navigates the path to sustainable transportation, investors and stakeholders must keep a close eye on the company’s initiatives, performance, and profitability. By doing so, they can gain a comprehensive understanding of its prospects and ensure alignment with their values and investment goals. The future is undoubtedly green, and Olectra Greentech’s endeavors may pave the way for a greener and more sustainable world.
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Disclaimer
The blog is meant for informational purposes and serves the general analysis of the stocks. Contents provided here are based on careful research and analysis utilizing the fundamental and technical indicators over a period of time. The post does not consist any direct recommendation about Investing or trading in the securities market. Thorough research and careful consideration are necessary for individuals to fulfill their personal responsibility in making financial decisions. Seeking professional advice before making any financial decisions is always advisable.
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