Hikal downgraded to 'Sell' by MarketsMOJO due to poor long-term growth and negative financial results

Hikal, a smallcap pharmaceutical and drug company, has recently been downgraded to a 'Sell' by MarketsMOJO on October 7th, 2024. This decision was based on the company's poor long-term growth, with an annual operating profit growth rate of -7.64% over the last 5 years. Additionally, Hikal's net sales have fallen by -20.89%, resulting in very negative results for the company in the quarter ending June 2024. The company's profits have also taken a hit, with a -70.7% decrease in PAT(Q) at Rs 5.10 crore and a ROCE(HY) at its lowest at 7.57%. Furthermore, the company's operating profit to interest ratio is also at its lowest at 2.93 times.
In the past year, Hikal has underperformed the market, generating a return of only 20.83%, compared to the market's (BSE 500) return of 33.39%. Other factors that contribute to the 'Sell' rating include the stock being in a mildly bullish range and its MACD and KST technical factors also being bullish. However, with a ROCE of 7.5, the stock does have an attractive valuation with a 2.5 enterprise value to capital employed. It is also currently trading at a discount compared to its average historical valuations. Despite the stock's 20.83% return in the past year, its profits have fallen by -28.1%.

It is worth noting that the majority shareholders of Hikal are the promoters of the company. This information may be important for investors to consider when making decisions about the stock. Overall, based on the company's financial performance and market trends, MarketsMOJO has downgraded Hikal to a 'Sell'.