Crompton Greaves Consumer Electrical downgraded to 'Hold' by MarketsMOJO, despite positive financials

Crompton Greaves Consumer Electrical, a largecap company in the consumer electronics industry, has recently been downgraded to a 'Hold' by MarketsMOJO on August 6, 2024. This decision was based on various factors, including the company's high management efficiency with a ROCE of 48.63% and a low Debt to Equity ratio of 0.04 times.
In addition, the company has shown positive results in the quarter ending June 2024, with its operating cash flow at its highest at Rs 843.41 crore and net sales at Rs 2,137.69 crore. Its PBDIT also reached its highest at Rs 232.37 crore.

Technically, the stock is currently in a mildly bullish range, with its MACD and KST technical factors also showing bullish trends. However, with a ROE of 14.7, the stock is fairly valued with a price to book value of 8.9. It is also trading at a premium compared to its average historical valuations.

While the stock has generated a return of 40.20% in the past year, its profits have only risen by 2.8%, resulting in a high PEG ratio of 25.9.

It is worth noting that the company has a high institutional holding of 86.36%, indicating that these investors have better capability and resources to analyze the fundamentals of companies compared to most retail investors. In fact, their stake in the company has increased by 2.35% over the previous quarter.

With a market cap of Rs 27,179 crore, Crompton Greaves Consumer Electrical is the second biggest company in the consumer electronics sector, constituting 19.27% of the entire industry. Its annual sales of Rs 7,573.65 crore make up 14.71% of the industry.

However, the company has shown poor long-term growth, with its operating profit only growing at an annual rate of 3.71% over the last 5 years. This may be a cause for concern for investors.

Overall, while Crompton Greaves Consumer Electrical has some positive aspects, such as high management efficiency and institutional holdings, its recent downgrade to a 'Hold' by MarketsMOJO suggests caution for investors.