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 last fiscal year, the company's net sales grew at an annual rate of 26.63%, while its operating profit saw a significant increase of 59.42%. This trend continued in the most recent quarter, with the company reporting positive results for the ninth consecutive quarter. Its return on capital employed (ROCE) is also at a high of 18.37%, indicating efficient use of capital.

Technically, the stock is currently in a mildly bullish range and has shown improvement since August 2024. The Bollinger Band, a key technical indicator, has been bullish since then as well.

One of the most attractive aspects of Som Distilleries & Breweries is its valuation. With a ROCE of 17.9 and an enterprise value to capital employed ratio of 3.4, the stock is trading at a discount compared to its historical average. Additionally, while the stock has seen negative returns of -12.94% in the past year, its profits have increased by 43.5%, resulting in a low PEG ratio of 0.7.

Moreover, the company's promoters have shown confidence in the business by increasing their stake by 0.53% in the previous quarter, currently holding 35.26% of the company. This is a positive sign for the future of the business.

However, there are some risks to consider. Som Distilleries & Breweries has a high debt to EBITDA ratio of 4.63 times, which may affect its ability to service debt. Additionally, its return on equity (ROE) is relatively low at 7.23%, indicating lower profitability per unit of shareholders' funds. Furthermore, the stock has underperformed the market in the last year, generating negative returns while the market saw a significant increase.

In conclusion, Som Distilleries & Breweries is a smallcap company with a positive outlook, backed by its strong financial performance and attractive valuation. However, investors should also consider the risks associated with the company before making any investment decisions.