Baroda Extrusion Ltd Upgraded to Hold on Improved Technicals and Solid Financial Trends

Technical Trend Shift Spurs Upgrade

The primary catalyst for the rating upgrade was a marked change in the technical outlook. The technical grade shifted from mildly bearish to mildly bullish, signalling a more favourable momentum in the stock’s price action. Key technical indicators underpinning this shift include a bullish Moving Average Convergence Divergence (MACD) on the weekly chart, alongside bullish Bollinger Bands on both weekly and monthly timeframes. The Dow Theory also supports this positive trend, showing mildly bullish signals on weekly and monthly charts.

While some indicators such as the daily moving averages remain mildly bearish and the monthly MACD and KST (Know Sure Thing) oscillators show mild bearishness, the overall technical sentiment has improved sufficiently to warrant a more optimistic stance. This technical improvement is reflected in the stock’s recent price performance, with a 6.49% gain on the day of the upgrade and a current price of ₹11.49, approaching its 52-week high of ₹11.78.

Financial Trend: Robust Growth Amidst Profitability Challenges

Baroda Extrusion’s financial trend has been positive, with the company reporting strong quarterly results for Q2 FY25-26 and consistent positive earnings over the last four quarters. Net sales for the nine-month period reached ₹128.12 crores, growing at an annualised rate of 25.31%, while operating profit surged by 45.76%. Operating cash flow for the year hit a peak of ₹17.40 crores, and profit after tax (PAT) for the nine months stood at ₹3.93 crores, indicating improving operational efficiency.

These figures have contributed to the company’s market-beating returns, with a 1-year stock return of 22.23% compared to the BSE500’s 7.85%, and an impressive 3-year return of 283.00% against the Sensex’s 41.57%. The stock’s year-to-date return of 28.81% further underscores its recent momentum.

Quality Assessment: Low Efficiency Dampens Outlook

Despite the positive sales and profit trends, Baroda Extrusion’s quality metrics reveal some weaknesses. The company’s average Return on Capital Employed (ROCE) stands at a modest 5.45%, indicating limited profitability generated from the total capital invested. Similarly, the average Return on Equity (ROE) is low at 6.10%, reflecting subdued returns for shareholders.

These figures suggest that while the company is growing, it is not yet translating this growth into strong capital efficiency or shareholder value. The high Debt to EBITDA ratio of 25.33 times further highlights concerns regarding the company’s ability to service its debt obligations, which could constrain future financial flexibility.

Valuation: Expensive Yet Justified by Growth

Baroda Extrusion’s valuation appears elevated, with an Enterprise Value to Capital Employed ratio of 9.2 and a Price to Earnings Growth (PEG) ratio of 0.1. The latter indicates that the stock is trading at a premium relative to its earnings growth potential, which has been extraordinary over the past year with profits rising by 491.1%. This rapid profit expansion supports the higher valuation, suggesting investors are pricing in continued growth.

Compared to its peers, the stock’s valuation is fair, reflecting its strong growth trajectory despite the underlying risks. The market capitalisation grade of 4 further indicates a mid-sized company with room to grow but also some volatility.

Technicals and Market Performance in Context

Baroda Extrusion’s recent price action has been impressive, with a 1-week return of 6.98% vastly outperforming the Sensex’s 0.88%. Over the last month, the stock surged 58.70%, while the Sensex declined marginally by 0.32%. This outperformance extends over longer periods, with 5-year returns of 2293.75% compared to the Sensex’s 76.39%, and a remarkable 10-year return of 2572.09% versus the Sensex’s 234.01%.

Such sustained outperformance highlights the stock’s appeal to investors seeking growth in the industrial products sector, particularly within the non-ferrous metals industry. The majority shareholding by promoters also suggests stable ownership and potential alignment with shareholder interests.

Summary and Outlook

The upgrade of Baroda Extrusion Ltd’s investment rating to Hold reflects a balanced view of its current standing. The technical indicators have improved significantly, signalling a more positive near-term price trend. Financially, the company has demonstrated strong sales growth and operating profit expansion, supported by consistent quarterly earnings and robust cash flow generation.

However, challenges remain in terms of management efficiency and debt servicing capacity, as evidenced by low ROCE and ROE figures and a high Debt to EBITDA ratio. The valuation is on the expensive side but justified by the company’s rapid profit growth and market-beating returns over multiple time horizons.

Investors should weigh these factors carefully. While the stock offers attractive growth potential and improved technical momentum, the underlying financial risks and valuation premium suggest a cautious approach. The Hold rating reflects this nuanced outlook, recommending investors monitor developments closely before committing additional capital.

Baroda Extrusion Ltd’s Key Metrics at a Glance:

• Current Price: ₹11.49 (Previous Close: ₹10.79)


• 52-Week Range: ₹6.23 – ₹11.78


• Mojo Score: 57.0 (Grade upgraded from Sell to Hold)


• Market Cap Grade: 4


• Net Sales Growth (9M): 25.31%


• Operating Profit Growth: 45.76%


• Operating Cash Flow (Yearly): ₹17.40 crores


• Return on Capital Employed (avg): 5.45%


• Return on Equity (avg): 6.10%


• Debt to EBITDA Ratio: 25.33 times


• PEG Ratio: 0.1

Overall, Baroda Extrusion Ltd’s recent upgrade to Hold by MarketsMOJO reflects a combination of improved technical signals and solid financial performance, tempered by valuation and efficiency concerns. Investors should continue to monitor quarterly results and debt metrics closely to assess the sustainability of this positive momentum.

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