The stock’s recent performance contrasts sharply with the broader market, where the Sensex opened higher at 85,470.92 points, gaining 284.45 points or 0.33% at the start of the day and currently trading at 85,296.64, a new 52-week high. The Sensex’s positive momentum is supported by mega-cap stocks and bullish moving averages, with the 50-day moving average positioned above the 200-day moving average, signalling sustained market strength.
In contrast, Alfa Transformers is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This technical positioning reflects the stock’s ongoing weakness and lack of upward momentum. The stock’s day change today was -0.56%, underperforming its sector by 0.7%.
Over the past year, Alfa Transformers has generated a negative return of -63.53%, a stark contrast to the Sensex’s positive return of 9.95% over the same period. The stock’s 52-week high was Rs.143.90, highlighting the extent of the decline from its peak levels.
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From a fundamental perspective, Alfa Transformers exhibits several areas of concern. The company’s long-term return on capital employed (ROCE) averages 4.19%, indicating limited efficiency in generating returns from its capital base. Net sales have grown at an annual rate of 8.58% over the last five years, while operating profit has shown a growth rate of 15.61% during the same period. These figures suggest modest growth but fall short of robust expansion.
Debt servicing capacity remains weak, with an average EBIT to interest ratio of -0.57, signalling challenges in covering interest expenses from operating earnings. The latest half-year financials reveal net sales of Rs.10.62 crore, reflecting a decline of 57.91% compared to previous periods. The half-year ROCE has dropped to 3.08%, while profit before tax excluding other income for the quarter stands at a negative Rs.0.71 crore.
In the context of broader market performance, the BSE500 index has delivered returns of 8.31% over the past year, further emphasising Alfa Transformers’ underperformance relative to the market. The company’s profits have contracted by 165.4% over the same timeframe, underscoring the financial pressures it faces.
Valuation metrics indicate that Alfa Transformers trades at a discount relative to its peers’ historical averages. The company’s ROCE of 1.5 and an enterprise value to capital employed ratio of 1.7 suggest a fair valuation in comparison to sector standards. Majority shareholding remains with non-institutional investors, which may influence liquidity and trading dynamics.
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Despite the challenging financial indicators, Alfa Transformers remains a part of the Other Electrical Equipment sector, which has seen mixed performance in recent months. The stock’s current price level at Rs.49.15 represents a significant retracement from its 52-week high, reflecting both market sentiment and company-specific factors.
In summary, Alfa Transformers’ stock has experienced a notable decline to its lowest level in a year, driven by subdued sales growth, profitability pressures, and weak debt coverage metrics. The stock’s technical position below all major moving averages further highlights the prevailing downward trend. Meanwhile, the broader market continues to show strength, with the Sensex reaching new highs and mega-cap stocks leading gains.
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