CCL International Downgraded to 'Sell' by MarketsMOJO Due to Weak Performance and Technical Trend

CCL International, a microcap trading company, has recently been downgraded to a 'Sell' by MarketsMOJO on May 22, 2024. This decision was based on several factors, including weak long-term fundamental strength, poor ability to service debt, and low profitability per unit of shareholders' funds.
One of the main reasons for the downgrade is the company's weak long-term performance, with a -215.66% CAGR growth in operating profits over the last 5 years. Additionally, the company's EBIT to Interest ratio is only 0.25, indicating a weak ability to service its debt. Furthermore, the company has only been able to generate a low average Return on Equity of 2.32%, further highlighting its low profitability.

From a technical standpoint, the stock is currently in a Mildly Bearish range, with a deteriorating trend since May 22, 2024, resulting in a 4.63% return. The MACD and KST technical factors also suggest a bearish trend.

In terms of performance, the stock has underperformed the BSE 500 in the last 3 years, 1 year, and 3 months, with a negative return of -3.04% in the last year. However, the company did show positive results in December 2023, with a 151.82% growth in net sales and a higher PAT of Rs 0.52 crore.

Despite these positive results, the company's ROCE of 2.5 and attractive valuation with a 1.1 Enterprise value to Capital Employed, it is still trading at a discount compared to its historical valuations. Additionally, while the stock has generated a negative return in the past year, its profits have increased by 45%, resulting in a PEG ratio of 0.6.

It is worth noting that the majority shareholders of CCL International are the promoters, which may have influenced the downgrade by MarketsMOJO. Overall, the stock call on CCL International has been downgraded to 'Sell' due to its weak long-term performance and technical trend, despite some positive results in the recent past.