KDDL downgraded to 'Strong Sell' after negative results, but shows long-term growth potential

KDDL, a smallcap company in the miscellaneous industry, has recently been downgraded to a 'Strong Sell' by MarketsMOJO on October 25, 2024. This downgrade comes after the company reported negative results in June 2024, breaking a streak of 14 consecutive positive quarters. The profit after tax for the quarter has fallen by 33.1%, with the operating profit to interest ratio at its lowest at 7.77 times and interest at its highest at Rs 7.06 crore.
Technically, the stock is in a mildly bearish range and has seen a deterioration in its trend since October 23, 2024, resulting in a -5.62% return. The Bollinger Band, a key technical factor, has also been bearish since October 23, 2024.

With a return on equity of 14, the stock is currently trading at an expensive valuation with a price to book value of 4.2. However, it is still trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 20.57%, while its profits have risen by 42.2%. This gives the company a PEG ratio of 0.8.

Despite being a smallcap company, domestic mutual funds hold only 0% of the company. This could indicate that they are not comfortable with the current price or the business, as they have the capability to conduct in-depth research on companies.

In the last year, KDDL has underperformed the market, with a return of 20.57% compared to the market's (BSE 500) return of 33.56%. However, the company has shown healthy long-term growth, with an annual growth rate of 29.19% in operating profit.

Overall, the downgrade to 'Strong Sell' by MarketsMOJO and the negative results in the last quarter may be a cause for concern for investors. However, the company has shown strong long-term growth potential and is currently trading at a discount compared to its historical valuations. Investors should carefully consider these factors before making any investment decisions.