Coastal Corporation Faces Significant Volatility Amidst Weak Fundamentals and Profit Growth

Coastal Corporation, a microcap player in the FMCG sector, has experienced significant volatility today, hitting a new 52-week low of Rs. 31.05. The stock opened with a loss of 2.87% and further declined to an intraday low, reflecting a 7.26% drop. This performance marks a notable underperformance against its sector, trailing by 3.23%.
Over the past year, Coastal Corporation has seen a decline of 44.00%, contrasting sharply with the Sensex's modest drop of 0.86%. The company's long-term fundamentals appear weak, evidenced by a -5.37% CAGR growth in operating profits over the last five years and a high debt-to-EBITDA ratio of 8.30 times, indicating challenges in servicing debt.

Despite these challenges, Coastal Corporation reported a remarkable 88.85% growth in net profit for the quarter ending June 25, with a profit before tax (PBT) growth of 160.08%. The company’s return on equity averages 4.66%, suggesting limited profitability per unit of shareholder funds. The stock is currently trading at a discount compared to its peers, with a PEG ratio of 0.5, indicating potential valuation attractiveness amidst its recent struggles.