Recent Price Movement and Market Context
Credo Brands Marketing’s stock has been on a declining trajectory over the past four trading sessions, registering a cumulative return of -6.28% during this period. Today, the stock touched an intraday low of Rs.93.05, representing a fall of -2.57% on the day and underperforming its sector by -1.01%. This new low also stands as the company’s all-time lowest price point.
The stock is currently trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, indicating a persistent downward trend in the short, medium, and long term. This technical positioning reflects the prevailing market sentiment towards the stock within the garments and apparels sector.
Sector and Broader Market Performance
On the broader market front, the Sensex opened flat but moved into negative territory, closing down by 231.68 points at 85,393.16, a decline of -0.37%. Despite this, the Sensex remains close to its 52-week high of 86,159.02, trading just 0.9% below that peak. The index is supported by bullish moving averages, with the 50-day moving average positioned above the 200-day moving average, signalling overall market resilience.
In contrast, Credo Brands Marketing has lagged significantly behind the benchmark index. Over the past year, the stock has recorded a return of -52.08%, while the Sensex has shown a positive return of 4.52%. This divergence highlights the challenges faced by the company relative to the broader market.
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Financial Performance and Profitability Trends
Credo Brands Marketing’s financial results over recent periods have shown subdued growth patterns. The company’s operating profit has recorded a compound annual rate of -7.83% over the last five years, indicating a contraction in core profitability. The latest six-month period saw the company’s profit after tax (PAT) at Rs.25.17 crores, reflecting a decline of -30.53% compared to the previous corresponding period.
Profitability pressures have coincided with a reduction in institutional investor participation. Institutional holdings have decreased by -1.34% over the previous quarter, now representing 2.88% of the company’s shareholding. Institutional investors typically possess greater analytical resources, and their reduced stake may reflect a reassessment of the company’s fundamentals.
Long-Term and Relative Performance
Over the last three years, Credo Brands Marketing has underperformed the BSE500 index across multiple time frames, including the one-year and three-month periods. The stock’s return of -52.08% over the past year contrasts sharply with the broader market’s positive trajectory, underscoring the challenges faced by the company in delivering shareholder value.
The stock’s 52-week high was Rs.213.70, illustrating the extent of the price decline to the current low of Rs.93.05. This represents a drop of more than 56% from the peak price within the last year.
Balance Sheet Strength and Efficiency Metrics
Despite the price weakness, Credo Brands Marketing exhibits certain financial strengths. The company reports a return on capital employed (ROCE) of 17.54%, indicating efficient utilisation of capital in generating earnings. Additionally, the debt to EBITDA ratio stands at a modest 1.31 times, suggesting a manageable level of leverage and a strong capacity to service debt obligations.
The enterprise value to capital employed ratio is 1.4, which is considered attractive relative to peer valuations. This valuation metric points to the stock trading at a discount compared to the historical averages of its sector counterparts.
However, the company’s profits have shown a slight decline of -2.6% over the past year, aligning with the broader trend of subdued earnings growth.
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Dividend Yield and Shareholder Returns
At the current price level, Credo Brands Marketing offers a dividend yield of 3.15%, which is relatively high within its sector. This yield provides a degree of income return to shareholders despite the stock’s price decline. Nevertheless, the overall total returns to investors over the past year have been negative, reflecting the stock’s downward price movement.
Summary of Key Price and Performance Indicators
To summarise, Credo Brands Marketing’s stock has reached a fresh 52-week low of Rs.93.05, marking a significant milestone in its recent price trajectory. The stock has underperformed both its sector and the broader market indices over multiple time frames. Financial metrics reveal subdued profit growth and a decline in institutional investor participation, while balance sheet indicators suggest operational efficiency and manageable leverage.
The company’s current valuation metrics indicate a discount relative to peers, and the dividend yield remains attractive. However, the stock’s position below all major moving averages and its sustained price decline highlight the challenges faced by Credo Brands Marketing in the current market environment.
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