Swiss Military Consumer Goods downgraded to 'Hold' by MarketsMOJO due to high valuation and lack of interest from domestic mutual funds.

Swiss Military Consumer Goods, a microcap company in the lifestyle industry, has recently been downgraded to a 'Hold' by MarketsMOJO on March 27, 2024. This decision was based on the company's strong ability to service debt, with a low Debt to EBITDA ratio of 0.97 times. Additionally, the company has shown healthy long-term growth, with Net Sales growing at an annual rate of 100.01% and Operating profit at 54.84%.
In December 2023, Swiss Military Consumer Goods declared very positive results, with a growth in Net Sales of 15.3%. This trend has continued for the last 10 consecutive quarters, with the company's ROCE (HY) at its highest at 12.86%, and NET SALES (Q) and PAT (Q) also at their highest at Rs 49.74 cr and Rs 2.33 cr, respectively.

Technically, the stock is currently in a mildly bullish range, with both its MACD and KST technical factors showing a bullish trend. In terms of market performance, the stock has outperformed BSE 500 in the last 3 years, 1 year, and 3 months, generating a return of 114.66% in the last 1 year alone.

However, with a ROE of 11.1, the stock is currently trading at a very expensive valuation, with a price to book value of 7.8. This is significantly higher than its average historical valuations. Additionally, while the stock has generated a return of 114.66% in the past year, its profits have only risen by 46.1%, resulting in a PEG ratio of 1.5.

It is also worth noting that despite its size, domestic mutual funds hold only 0% of the company. This could signify that they are either not comfortable with the current price or the business itself. However, domestic mutual funds have the capability to conduct in-depth research on companies, making their small stake a potential red flag for investors.

Overall, while Swiss Military Consumer Goods has shown strong financials and market performance, its expensive valuation and lack of interest from domestic mutual funds may warrant a 'Hold' rating for now. Investors should keep an eye on the company's future developments and conduct their own research before making any investment decisions.