MarketsMOJO Downgrades RRIL Stock to 'Sell' Due to Negative Results and Expensive Valuation

On March 5, 2024, MarketsMOJO downgraded its stock call on RRIL, a microcap trading company, to 'Sell'. This decision was based on the company's negative results in December 2023, with a -65.26% growth in PAT (HY) and a -32.4% decrease in NET SALES (Q). Additionally, PBDIT (Q) was at its lowest at Rs 1.39 crore.

Technically, the stock is in a Mildly Bearish range, with a deteriorating trend since March 5, 2024, resulting in -1.81% returns. The RSI and Bollinger Band technical factors also indicate a Bearish trend.

With a ROCE of 11.6, RRIL has a Very Expensive valuation, with a 3.2 Enterprise value to Capital Employed. It is currently trading at a premium compared to its average historical valuations. Although the stock has generated a return of 94.36% in the past year, its profits have only risen by 225%, resulting in a PEG ratio of 0.3.

However, there are some positive factors to consider. RRIL has a strong ability to service debt, with a low Debt to EBITDA ratio of 0.75 times. It also has a healthy long-term growth rate, with Net Sales growing at an annual rate of 304.80% and Operating profit at 243.71%.

The majority shareholders of RRIL are the promoters, which can be seen as a positive sign. Additionally, the stock has outperformed the market (BSE 500) with a return of 94.36% in the last year, compared to the market's 37.16% returns.

In conclusion, MarketsMOJO's downgrade of RRIL's stock call to 'Sell' is based on its negative results and expensive valuation. However, the company has shown strong growth potential and has outperformed the market in the past year. Investors should carefully consider these factors before making any investment decisions.