Som Distilleries & Breweries Receives 'Buy' Rating, Shows Strong Growth and Attractive Valuation

Som Distilleries & Breweries, a smallcap company in the breweries industry, has recently received a 'Buy' rating from MarketsMOJO. This upgrade is based on the company's healthy long-term growth, positive financial results, and attractive valuation.
In the past year, Som Distilleries & Breweries has shown a consistent growth in net sales, with an annual rate of 26.63%. Its operating profit has also increased by 59.42%, leading to very positive results in March 2024. The company has declared positive results for the last 9 consecutive quarters, showcasing its strong performance.

The company's return on capital employed (ROCE) is at a high of 18.37%, indicating efficient use of capital. Its net sales and profit before tax have also shown significant growth in the last quarter, at 51.09% and 63.88% respectively.

Technically, the stock is in a mildly bullish range and has shown improvement in its trend since June 2024. The key technical factor, KST, has been bullish since then as well.

With a ROCE of 17.9, Som Distilleries & Breweries has a very attractive valuation, with a 3.3 enterprise value to capital employed. The stock is currently trading at a discount compared to its historical valuations. In the past year, while the stock has generated a return of 13.80%, its profits have risen by 43.5%, resulting in a low PEG ratio of 0.7.

Moreover, the promoters of the company have increased their stake by 0.53% in the previous quarter, currently holding 35.26% of the company. This is a positive sign of high confidence in the future of the business.

However, there are some risks associated with investing in Som Distilleries & Breweries. The company has a high debt to EBITDA ratio of 4.63 times, which may affect its ability to service debt. Additionally, its return on equity (avg) is at a low of 7.23%, indicating low profitability per unit of shareholders' funds.

In the past year, the stock has underperformed the market, generating a return of 13.80% compared to the market's (BSE 500) return of 38.50%. Investors should consider these risks before making any investment decisions. Overall, with its strong growth and attractive valuation, Som Distilleries & Breweries is a promising stock to consider for long-term investment.