MarketsMOJO Downgrades Gillette India to 'Hold' Despite Positive Short-Term Performance

Gillette India, a leading FMCG company in the largecap category, has recently been downgraded to a 'Hold' by MarketsMOJO on October 21, 2024. This decision was based on various factors, including the company's high management efficiency with a ROE of 32.31% and a low Debt to Equity ratio of 0 times. Additionally, Gillette India has declared positive results for the last 3 consecutive quarters, with its ROCE (HY) at a high of 58.77% and PBDIT (Q) at Rs 174.53 crore.
While the stock is currently in a mildly bullish range, there are multiple factors that suggest a bullish trend, such as MACD, Bollinger Band, KST, and DOW. The majority shareholders of the company are the promoters, indicating their confidence in the company's performance.

In the long term, Gillette India has shown market-beating performance, outperforming BSE 500 in the last 3 years, 1 year, and 3 months. However, its net sales and operating profit have only grown at an annual rate of 7.18% and 4.48%, respectively, over the last 5 years, indicating poor long-term growth.

With a ROE of 42.4, the stock is currently trading at a very expensive valuation with a price to book value of 28.8. However, it is trading at a fair value compared to its average historical valuations. In the past year, while the stock has generated a return of 36.18%, its profits have only risen by 15.8%, resulting in a PEG ratio of 4.3.

Overall, while Gillette India has shown strong management efficiency and positive results in the short term, its long-term growth and expensive valuation suggest a 'Hold' recommendation for investors.