Goa Carbon downgraded to 'Strong Sell' by MarketsMOJO due to poor long-term growth and declining profitability

Goa Carbon, a microcap company in the carbon black industry, has recently been downgraded to a 'Strong Sell' by MarketsMOJO on October 7th, 2024. This downgrade is due to poor long-term growth, with an annual operating profit growth rate of only 9.47% over the last 5 years. In addition, the company has declared negative results for the last 2 consecutive quarters, with a significant fall in net sales of -28.39% in June 2024.
The company's profitability has also taken a hit, with a -86.1% decrease in PAT(Q) at Rs 2.98 crore and the lowest operating profit to interest ratio of 1.26 times. Furthermore, the net sales for the quarter were also at their lowest at Rs 127.80 crore. These factors have contributed to the stock being in a Mildly Bearish range, with a deteriorating technical trend since October 7th, 2024, resulting in -5.29% returns.

One key technical factor, the Bollinger Band, has been Bearish since October 7th, 2024. Another concerning factor is that despite being a microcap company, domestic mutual funds hold only 0% of the company. This could indicate that they are not comfortable with the price or the business, as they have the capability to conduct in-depth research on companies.

However, there are some positive aspects to consider. With a ROCE of 39.6, the company has a fair valuation with a 2.4 Enterprise value to Capital Employed. Additionally, the stock is currently trading at a discount compared to its average historical valuations. Over the past year, the stock has generated a return of 36.16%, outperforming the BSE 500 index. Furthermore, over the last 3 years, the stock has consistently outperformed the BSE 500 index.

In conclusion, while the recent downgrade to 'Strong Sell' by MarketsMOJO may raise concerns, it is important to consider all factors before making any investment decisions. With a fair valuation and consistent returns over the last 3 years, Goa Carbon may still hold potential for investors.