Valuation Perspective Highlights Elevated Pricing
The valuation metrics for T & I Global indicate a premium positioning relative to its industry peers. The company’s price-to-earnings (PE) ratio stands at 35.61, signalling a valuation level that is considered very expensive within the tea and coffee industry segment. This is further underscored by an enterprise value to EBITDA ratio of 32.70, which suggests that the stock is trading at a significant premium compared to earnings before interest, taxes, depreciation, and amortisation.
Price-to-book value is close to parity at 0.96, reflecting that the market price is nearly equivalent to the company's book value. However, the return on capital employed (ROCE) and return on equity (ROE) remain subdued at 1.27% and 2.71% respectively, indicating limited profitability generated from the capital invested and shareholders’ funds. The absence of a dividend yield further emphasises the cautious stance investors might adopt given the current valuation.
When compared to peers such as Rossell India, which trades at a PE of 15.12 and EV to EBITDA of 9.90, T & I Global’s valuation appears stretched. This elevated pricing level may reflect market expectations of future growth or other qualitative factors, but it also raises questions about the sustainability of such valuations amid recent financial performance.
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Technical Indicators Signal a Shift Towards Bearish Momentum
Technical analysis of T & I Global reveals a transition from a mildly bullish to a mildly bearish trend. Key momentum indicators such as the Moving Average Convergence Divergence (MACD) show a weekly mildly bearish stance and a monthly bearish outlook. Similarly, Bollinger Bands on both weekly and monthly charts suggest bearish pressure, indicating increased volatility and potential downward price movement.
The Relative Strength Index (RSI) on weekly and monthly timeframes currently does not provide a clear signal, reflecting a neutral momentum stance. The Know Sure Thing (KST) indicator aligns with the bearish sentiment on both weekly and monthly scales. Meanwhile, moving averages on a daily basis maintain a mildly bullish posture, suggesting some short-term support despite the broader negative trend.
Price action for the day ranged between ₹179.05 and ₹184.00, closing at ₹179.90, down from the previous close of ₹185.85. The stock’s 52-week high and low are ₹216.90 and ₹130.00 respectively, indicating a wide trading range over the past year. Recent price returns have underperformed the broader market, with a one-week return of -8.56% against the Sensex’s 0.79% gain and a year-to-date return of -12.67% compared to the Sensex’s 9.08% rise.
Financial Trends Reflect Mixed Signals Amid Profitability Challenges
Despite a positive financial performance in the second quarter of FY25-26, including net sales growth of 57.29% over the latest six months and a profit before tax (excluding other income) increase of 354.2% compared to the previous four-quarter average, the company’s longer-term financial trajectory presents challenges. Operating cash flow for the year reached a peak of ₹33.62 crores, signalling healthy cash generation in the short term.
However, the company’s operating profits have shown a compound annual growth rate (CAGR) decline of 41.82% over the past five years, highlighting persistent pressure on core earnings. The average return on equity over this period stands at 9.09%, which is modest and suggests limited efficiency in generating shareholder value. Over the last year, profits have contracted by 53.4%, a significant reduction that contrasts with the broader market’s positive performance.
These financial trends underscore the complexity of T & I Global’s current position, where short-term operational improvements coexist with longer-term fundamental weaknesses.
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Quality Assessment and Market Positioning
T & I Global’s quality metrics reflect a company with a dominant promoter shareholding structure, which often provides stability in governance and strategic direction. However, the weak long-term fundamental strength, as evidenced by the negative CAGR in operating profits and low returns on equity, tempers the overall quality outlook.
The stock’s performance relative to the Sensex over various time horizons presents a mixed picture. While the 10-year return of 520.34% significantly outpaces the Sensex’s 229.48%, recent shorter-term returns have lagged behind the benchmark. For instance, over the past year, the stock’s return of -9.53% contrasts with the Sensex’s 10.47% gain, indicating recent underperformance amid broader market strength.
This divergence suggests that while T & I Global has delivered substantial long-term value, current market conditions and company-specific factors have led to a more cautious assessment.
Investor Considerations Amid Market Assessment Changes
Investors analysing T & I Global should weigh the elevated valuation levels against the backdrop of subdued profitability and mixed technical signals. The premium pricing implies expectations of future growth or strategic developments, yet the recent financial trends and technical indicators suggest a more guarded outlook.
Given the stock’s recent underperformance relative to the broader market and the shift in technical momentum towards bearishness, market participants may wish to monitor upcoming quarterly results and sector developments closely. The company’s ability to sustain sales growth and improve profitability will be critical in shaping future market assessments.
Overall, the revision in T & I Global’s evaluation reflects a nuanced view that balances short-term operational gains with longer-term fundamental challenges and market dynamics.
Summary
T & I Global’s recent changes in market assessment stem from a combination of factors: a valuation that places the stock at a premium relative to peers, technical indicators signalling a shift towards bearish momentum, financial trends showing short-term growth but long-term profitability pressures, and quality metrics reflecting stable ownership but modest returns. These elements collectively inform the current analytical perspective on the company’s market position and investment appeal.
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