Latteys Industries Limited manufactures and sells pumps for domestic, agriculture, industrial, and horticultural sectors in India. The company offers submersible, self-priming, centrifugal mono block pumps, shallow well pumps, and horizontal open well submersible, as well as electric/induction motors, and regenerative and solar pumps. It also provides support services. Latteys Industries Limited was founded in 2004 and is based in Ahmedabad, India.

India

Latteys Industries Limited

Industrials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

LATTEYS.NS reported revenue of INR 653mn in the last 12 months, down 41% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 60% from FY23 to INR 0.20.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 42ppts and its growth accelerated by 2ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported weak EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 7.0% in the last 12 months, up from 3.6% in FY23. 

Historically, LATTEYS.NS has reported weak net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 1.7%, down from 2.6% in FY23. 

Latteys Industries Limited reported a return on equity (RoE) of 6.0% in the last 12 months, down from 16.3% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 4.5% in the last 12 months, a decrease from 6.3% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 11.2%, above the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.9 in the past several years. This ratio implies a poor shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

LATTEYS.NS has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is very unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth, low margin volatility, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, bleak profitability, and inadequate interest coverage.

In highly turbulent market conditions, LATTEYS.NS is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, LATTEYS.NS is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from moderate to substantial. 

Based on key historical and expected multiples, the stock is greatly overvalued relative to its peers. In particular, the stock is overpriced on P/E, 'expensive' on EV/EBITDA, overvalued on P/FCF. 

Latteys Industries Limited

₹ 20.59

2

Latteys Industries Limited

₹ 20.59

2

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Profitability factor

Risk / Profitability

Risk factor

Profitability factor

₹ 20.59

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