Gujarat Craft Industries Shows Positive Technical Momentum Amid Profit Decline

Gujarat Craft Industries, a microcap player in the trading sector, has shown notable performance metrics despite facing challenges in profitability. The company has generated a remarkable return of 50.48% over the past year, significantly outperforming the BSE 500 index across various time frames, including the last three years and three months.
Currently, Gujarat Craft Industries boasts a Return on Capital Employed (ROCE) of 6.4, indicating an attractive valuation with an enterprise value to capital employed ratio of 1.3. However, the company has experienced a decline in profits, with a drop of 34.3% over the same period. This decline is juxtaposed with a modest annual growth in net sales of 5.60% and an operating profit growth rate of 8.04% over the last five years.

The company's financial health is further complicated by a high Debt to EBITDA ratio of 3.45 times, reflecting a low ability to service its debt. Additionally, the operating cash flow for the year has reached a low of Rs 0.02 crore, while interest expenses have surged by 31.66% to Rs 3.41 crore over the first nine months.