Section 1: Company Overview and Fundamental Insights

1.1 Company Overview:

Richelieu Hardware Ltd (TSX: RCH) is a Canadian company that imports, manufactures, and distributes specialty hardware and related goods. The corporation operates throughout Canada as well as the eastern and midwestern parts of the United States. The majority of the company's revenue is generated from its operations in Canada. Home furnishing manufacturers, residential and commercial woodworkers, hardware merchants, and remodeling superstores are the primary clients of the organization.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~41.60% of the total shareholding. Mawer Investment Management Ltd. and Lord (Richard) are holding a maximum stake in the company at ~12.33% and ~7.56%, respectively.

1.4 Key Metrics:

In Q1 2022, the company reported a higher financial number, where its sales, EBITDA and net earnings were at elevated levels. Moreover, it reported growing cash from operations and prolific current ratio, which indicates better liquidity level.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates: The below picture gives an overview of its recent activities, such as acquisitions, Catering masses and quarterly dividend distribution:

2.2 Insights of Q1 2022:

Section 3: Key Risks:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavorable movement in the stock prices.

Disclaimer

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