XT Global Infotech Receives 'Hold' Rating, Attractive Valuation, But Poor Long-Term Growth Raises Concerns

XT Global Infotech, a microcap IT software company, has recently received a 'Hold' rating from MarketsMOJO. This upgrade is based on technical analysis, with the stock currently in a Mildly Bullish range and the key technical factor, KST, being Bullish since 07 Nov 2024.
The company also has an attractive valuation with a ROCE of 6.4 and an Enterprise value to Capital Employed ratio of 2.9. Additionally, the stock is currently trading at a discount compared to its average historical valuations.

However, the company has shown poor long-term growth with Net Sales growing at an annual rate of 4.16% and Operating profit at 7.43% over the last 5 years. In the last 3 consecutive quarters, the company has declared negative results with PAT(HY) at Rs 4.88 cr, growing at -21.16% and ROCE(HY) at its lowest at 8.21%. NET SALES(Q) is also at its lowest at Rs 48.74 cr.

Despite its small size, domestic mutual funds hold only 0.01% of the company. This could signify that they are not comfortable with the price or the business, as they have the capability to do in-depth on-the-ground research on companies.

In the last 1 year, XT Global Infotech has underperformed the market (BSE 500) with negative returns of -12.72%, while the market has generated returns of 26.29%. This could be a cause for concern for potential investors. Overall, the stock has been upgraded to a 'Hold' based on technical analysis, but its poor long-term growth and underperformance in the market may be a red flag for investors.