Shree Cement downgraded to 'Hold' by MarketsMOJO due to financial challenges and sideways stock trend

Shree Cement, a largecap company in the cement industry, has recently been downgraded to a 'Hold' by MarketsMOJO. This decision was based on various factors, including the company's low Debt to Equity ratio of 0.02 times, indicating a strong financial position. However, the technical trend for the stock is currently sideways, with no clear price momentum.
In addition, the company has shown poor long-term growth, with an annual rate of -0.10% for operating profit over the last 5 years. This was further reflected in the negative results declared in Jun'2024, after 3 consecutive positive quarters. The PAT(Q) at Rs 278.61 crore has fallen by -51.3%, while the OPERATING PROFIT TO NET SALES (Q) is at its lowest at 18.09% and PBT LESS OI(Q) at Rs 166.72 crore.

Despite these challenges, Shree Cement has a high institutional holding of 24.87%, indicating that these investors have better capabilities and resources to analyze the company's fundamentals. However, with a ROE of 11.6, the stock is currently trading at a very expensive valuation with a 4.4 Price to Book Value. It is worth noting that the stock is currently trading at a discount compared to its average historical valuations.

In the past year, Shree Cement has underperformed the market, generating a return of only 1.07%, while its profits have risen by 34.4%. This has resulted in a PEG ratio of 1.3 for the company. Overall, while Shree Cement may have potential for growth in the future, it is currently facing challenges and has been downgraded to a 'Hold' by MarketsMOJO.