Federal-Mogul Goetze Faces Declining Profit and Underperformance Amid Bearish Market Signals

Federal-Mogul Goetze (India), a small-cap player in the auto ancillary sector, has recently faced challenges reflected in its stock performance. Over the past five years, the company has experienced a decline in operating profit, with an annual growth rate of -2.01%. This trend has contributed to a technical shift in market sentiment, with the stock currently positioned in a mildly bearish range, generating a return of -1.55% since late December 2024.
Despite these challenges, the company has demonstrated resilience with positive results reported for the last three consecutive quarters. The profit after tax for the first nine months stands at Rs 114.06 crore, marking a growth of 21.65%. Additionally, the return on capital employed (ROCE) has reached a notable 17.34%, and cash and cash equivalents are at a robust Rs 554.65 crore.

The company's financial health is further underscored by a low debt-to-equity ratio, averaging at 0 times, and an attractive valuation with a price-to-book ratio of 1.8. However, domestic mutual funds hold only a minimal stake of 0.01%, indicating a cautious approach towards the stock. Over the past year, the stock has underperformed the broader market, achieving a return of 3.61% compared to the BSE 500's 15.70%.