Safari Industries (India) Downgraded to 'Sell' by MarketsMOJO on November 9, 2024

Safari Industries (India), a midcap company in the plastic products industry, has recently been downgraded to a 'Sell' by MarketsMOJO on November 9, 2024. This decision was based on the company's flat results in September 2024, with a decrease of 30.3% in PAT(Q) and the lowest PBDIT(Q) at Rs 47.89 crore. Additionally, the operating profit to net sales (Q) ratio was also at its lowest at 10.46%.
One of the main reasons for the 'Sell' rating is the company's expensive valuation, with a price to book value of 13.2 and a ROE of 21.3. This is significantly higher than its average historical valuations. Moreover, while the stock has only generated a return of 5.24% in the past year, its profits have increased by 14.7%, resulting in a high PEG ratio of 5.7.

Furthermore, Safari Industries (India) has underperformed the market in the last year, with a return of 5.24% compared to the BSE 500's return of 30.56%. However, the company does have some positive factors, such as a high management efficiency with a ROCE of 15.09% and a low debt to EBITDA ratio of 0.46 times, indicating a strong ability to service debt.

In terms of long-term growth, Safari Industries (India) has shown promising results with an annual growth rate of 120.37% in operating profit. However, the technical trend for the stock is currently sideways, indicating no clear price momentum. This trend has also deteriorated from mildly bullish on November 8, 2024.

It is worth noting that the company has a high institutional holding of 35.14%, which suggests that these investors have better resources and capabilities to analyze the company's fundamentals compared to retail investors. Additionally, their stake in the company has increased by 0.63% in the previous quarter.

In conclusion, while Safari Industries (India) has some positive aspects, such as high management efficiency and healthy long-term growth, the recent downgrade to 'Sell' by MarketsMOJO and the company's expensive valuation may be cause for concern for potential investors. It is important to carefully consider all factors before making any investment decisions.