Gokul Agro Resources Downgraded to 'Hold' by MarketsMOJO, Despite Strong Growth and Performance

Gokul Agro Resources, a smallcap company in the refined oil and vanaspati industry, has recently been downgraded to a 'Hold' by MarketsMOJO on October 22, 2024. This decision was based on the company's low Debt to Equity ratio, which is currently at 0 times. However, the company has shown healthy long-term growth with an annual increase of 27.96% in Net Sales and 36.32% in Operating profit. In fact, in the last quarter, the company declared very positive results with a growth in Net Profit of 19.56%. This trend has been consistent for the last two consecutive quarters.
The stock is currently in a mildly bullish range and has shown multiple bullish factors such as MACD, KST, and DOW. In the long term, the company has outperformed the BSE 500 index and has generated a return of 121.17% in the last year. With a market cap of Rs 3,866 crore, Gokul Agro Resources is the second biggest company in the sector and constitutes 21.61% of the entire sector. Its annual sales of Rs 15,686.66 crore make up 52.78% of the industry.

However, with a ROCE of 28.6, the company has a very expensive valuation with a 4.2 Enterprise value to Capital Employed. The stock is currently trading at a premium compared to its average historical valuations. In the past year, while the stock has generated a return of 121.17%, its profits have only risen by 28.4%. This gives the company a PEG ratio of 0.8.

Interestingly, despite its size, domestic mutual funds hold only 0.18% of the company. This could signify that they are not comfortable with the current price or the business, as domestic mutual funds have the capability to conduct in-depth research on companies. Overall, Gokul Agro Resources has shown strong growth and performance, but its expensive valuation and lack of interest from domestic mutual funds may be a cause for concern.