Cello World Downgraded to 'Sell' by MarketsMOJO, Technical Factors Indicate Negative Outlook

Cello World, a midcap FMCG company, has recently been downgraded to a 'Sell' by MarketsMOJO on November 6, 2024. This downgrade comes after the company reported flat results in June 2024, with the lowest EPS(Q) at Rs 3.89. The stock is currently in a bearish range and the technical trend has deteriorated since November 6, 2024, with a return of 4.55% since then. The MACD and KST technical factors are also bearish, indicating a negative outlook for the stock.
One of the main reasons for the 'Sell' rating is the company's expensive valuation, with a ROCE of 33.8 and an enterprise value to capital employed ratio of 14.3. This suggests that the stock is overvalued and may not be a good investment option at the moment. Additionally, while the stock has generated a return of 8.47% in the past year, its profits have only risen by 24%, indicating a slower growth rate compared to the market.

Furthermore, Cello World has underperformed the market in the last year, with a return of 8.47% compared to the BSE 500 index's return of 33.50%. However, the company does have strong long-term fundamental strength, with an average ROCE of 33.78%. It also has a healthy long-term growth rate, with net sales growing at an annual rate of 21.30% and operating profit at 25.84%. Additionally, the company has a low debt to EBITDA ratio of 0.38 times, indicating a strong ability to service debt.

It is worth noting that Cello World has a high institutional holding of 21.27%, which suggests that these investors have better capability and resources to analyze the company's fundamentals compared to retail investors. Overall, while Cello World may have some positive aspects, the recent downgrade and bearish technical trend make it a 'Sell' for now. Investors should carefully consider these factors before making any investment decisions.