Associated Alcohols & Breweries: A Smallcap Stock with Strong Financials and Bullish Outlook

Associated Alcohols & Breweries, a smallcap company in the breweries and distilleries industry, has recently caught the attention of investors with its positive performance in the market. On November 29, 2024, MarketsMOJO upgraded their stock call on the company to 'Buy', citing multiple factors that make it an attractive investment.
One of the key reasons for the 'Buy' recommendation is the company's low Debt to Equity ratio, which stands at 0.04 times on average. This indicates a strong financial position and the ability to manage debt effectively.

In terms of financial performance, Associated Alcohols & Breweries has shown positive results in the September quarter of 2024. Its Profit After Tax (HY) has grown by 28.06% to Rs 33.04 crore, while its Net Sales (Q) reached a record high of Rs 254.63 crore.

From a technical standpoint, the stock is currently in a bullish range and has shown improvement in its trend from Mildly Bullish on November 29, 2024. Multiple indicators such as MACD, Bollinger Band, KST, and OBV also suggest a bullish outlook for the stock.

Moreover, the company has a very attractive valuation with a ROCE of 15.6 and an Enterprise value to Capital Employed ratio of 3.9. It is also trading at a discount compared to its historical valuations, making it a potentially undervalued stock.

In the past year, Associated Alcohols & Breweries has generated a return of 108.99%, outperforming the BSE 500 index. Its profits have also seen a growth of 24.7%, resulting in a PEG ratio of 1.8.

However, there are some risks associated with investing in this company. Its long-term growth may be affected as its Operating Profit has only grown at an annual rate of 3.62% over the last 5 years. Additionally, despite its smallcap size, domestic mutual funds hold only 0% of the company, which could indicate a lack of confidence in the business or its current valuation.

In conclusion, Associated Alcohols & Breweries is a smallcap company with a strong financial position, positive financial performance, and a bullish outlook in the market. While there are some risks to consider, its potential for market-beating returns makes it a 'Buy' according to MarketsMOJO.