Narmada Gelatines Reports Weak Financial Metrics Amidst Declining Market Performance

Narmada Gelatines, a microcap player in the chemicals industry, is currently facing challenges reflected in its recent financial performance. Over the past five years, the company has experienced a modest annual net sales growth rate of 6.80%. However, the latest results for September 2024 indicate stagnation, with cash and cash equivalents dropping to Rs 2.17 crore, marking a concerning low.
The company's debtors turnover ratio has also reached a low of 7.92 times, suggesting potential issues in managing receivables. Technically, the stock is positioned in a mildly bearish range, having generated a return of -2.4% since December 23, 2024. Key indicators such as MACD and Bollinger Bands further support this bearish outlook.

Despite a return on capital employed (ROCE) of 15.2, the stock is considered expensive with an enterprise value to capital employed ratio of 1.9, trading at a premium compared to historical valuations. Over the past year, Narmada Gelatines has underperformed the broader market, with a decline of -10.67% in stock value, while the BSE 500 index has risen by 16.96%. Additionally, promoter confidence appears to be waning, as their stake has decreased by 2.65% in the last quarter.