Gujarat Craft Industries Downgraded to 'Sell' by MarketsMOJO, Despite Attractive Valuation and Promising Performance

Gujarat Craft Industries, a microcap trading company, has recently been downgraded to a 'Sell' by MarketsMOJO on February 26, 2024. This decision was based on several factors, including weak long-term fundamental strength with an average Return on Capital Employed (ROCE) of 9.51%, poor long-term growth with only a 4.19% annual growth in Net Sales and 8.04% in Operating profit over the last 5 years, and a high Debt to EBITDA ratio of 3.45 times, indicating a low ability to service debt.
In addition, the company's recent results for December 2023 showed a PBT LESS OI(Q) of only Rs 0.59 crore and an EPS(Q) of Rs 1.02, the lowest in recent quarters. However, the stock is currently in a mildly bullish range and its MACD and KST technical factors are also bullish.

Despite these factors, Gujarat Craft Industries has an attractive valuation with a ROCE of 7.8 and an Enterprise value to Capital Employed ratio of 1.1. It is also currently trading at a discount compared to its average historical valuations. However, while the stock has generated a return of 75.11% in the past year, its profits have fallen by -6.8%.

The majority shareholders of Gujarat Craft Industries are the promoters, and the company has shown market-beating performance in both the long-term and near-term. In the last 3 years, 1 year, and 3 months, the stock has outperformed BSE 500, further highlighting its potential for growth.