NTC Industries Downgraded to 'Sell' by MarketsMOJO Due to Negative Q2 Results

NTC Industries, a microcap company in the cigarettes/tobacco industry, has recently been downgraded to a 'Sell' by MarketsMOJO on September 3rd, 2024. This decision was based on the company's negative results in the quarter ending June 2024. The net sales for the quarter have fallen by 37.15%, while the PBT (profit before tax) has decreased by 49.78%. Additionally, the company's ROCE (return on capital employed) for the half-year period is at its lowest at 6.71%.
One of the main reasons for the 'Sell' rating is the company's expensive valuation, with a ROCE of 1.7 and an enterprise value to capital employed ratio of 2.1. This is higher than its average historical valuations. Despite generating a return of 133.46% in the past year, the company's profits have declined by 14%.

However, there are some positive factors to consider. NTC Industries has a low debt to equity ratio of 0.08 times, indicating a healthy financial position. The company has also shown consistent long-term growth, with net sales growing at an annual rate of 20.42% and operating profit at 67.70%.

From a technical standpoint, the stock is currently in a mildly bullish range. The technical trend has improved since July 26th, 2024, and has generated a return of 41.4% since then. Multiple factors, such as MACD, Bollinger Band, and KST, suggest a bullish outlook for the stock.

The majority shareholders of NTC Industries are the promoters, which can be seen as a positive sign for the company. Additionally, the stock has consistently outperformed the BSE 500 index in the last three annual periods, further highlighting its potential for growth.

In conclusion, while NTC Industries may have faced some setbacks in the recent quarter, the company has shown promising long-term growth and has a strong financial position. Investors should carefully consider all factors before making any investment decisions.