Hikal Downgraded to 'Sell' by MarketsMOJO Due to Poor Long-Term Growth and Negative Results

Hikal, a smallcap pharmaceutical company, has recently been downgraded to a 'Sell' by MarketsMOJO on November 11, 2024. This decision was based on the company's poor long-term growth, with an annual rate of -6.61% in operating profit over the last 5 years. Additionally, the company declared very negative results in June 2024 with a fall in net sales of -20.89% and a significant decrease in PAT(Q) at Rs 5.10 cr, falling by -70.7%. The company's ROCE(HY) is also at its lowest at 7.57%, and its operating profit to interest (Q) is at its lowest at 2.93 times.
Other factors contributing to the 'Sell' rating include the stock being technically in a Mildly Bullish range, with its MACD and KST technical factors also being Bullish. However, with a ROCE of 7.5, the stock has a fair valuation with a 2.7 Enterprise value to Capital Employed. It is also currently trading at a discount compared to its average historical valuations. Despite generating a return of 36.14% over the past year, the company's profits have fallen by -28.1%.

One potential positive for Hikal is the increasing participation by institutional investors. These investors have recently increased their stake in the company by 0.53% and collectively hold 10.36% of the company. With better resources and capabilities to analyze company fundamentals, their interest in Hikal could be a sign of potential future growth. However, based on the current data and performance, MarketsMOJO has downgraded the stock to a 'Sell' and advises caution for investors.