The stock’s current price level is notably below all major moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling sustained weakness in its short to long-term price trends. This performance contrasts with the broader market, where the Sensex advanced by 0.62% to close at 85,193.83, edging closer to its 52-week high of 85,290.06. The Sensex’s positive momentum was supported by mega-cap stocks and bullish moving averages, with the 50-day moving average trading above the 200-day average.
Over the last year, Gokul Refoils and Solvent’s stock price has declined by 32.74%, a stark contrast to the Sensex’s 9.81% gain over the same period. The stock’s 52-week high was Rs.66, indicating a significant retracement from its peak levels.
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From a fundamental perspective, the company’s long-term financial metrics reveal subdued performance. The operating profits have shown a compound annual growth rate (CAGR) of -5.17% over the past five years, indicating contraction in core earnings. Additionally, the company’s debt servicing capacity appears limited, with a Debt to EBITDA ratio of 5.09 times, suggesting elevated leverage relative to earnings before interest, taxes, depreciation, and amortisation.
Profitability metrics also reflect modest returns, with an average Return on Equity (ROE) of 6.54%, which points to relatively low efficiency in generating profits from shareholders’ funds. The stock’s underperformance extends beyond the last year, as it has lagged the BSE500 index over the past three years, one year, and three months.
Despite these challenges, the company has reported positive net profit after tax (PAT) figures for the last three consecutive quarters. The PAT for the nine-month period stands at Rs.14.02 crores. Furthermore, cash and cash equivalents reached a peak of Rs.119.61 crores during the half-year, indicating a solid liquidity position. The Debtors Turnover Ratio for the half-year was recorded at 26.22 times, reflecting efficient collection of receivables.
Valuation metrics present an interesting contrast. The company’s Return on Capital Employed (ROCE) is at 5%, and the Enterprise Value to Capital Employed ratio is 1.1, suggesting an attractive valuation relative to the capital invested. The stock is trading at a discount compared to the average historical valuations of its peers in the edible oil sector. Over the past year, while the stock price has declined by 32.74%, the company’s profits have increased by 26.3%, resulting in a Price/Earnings to Growth (PEG) ratio of 1.
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Majority ownership of Gokul Refoils and Solvent remains with the promoters, maintaining a stable shareholding structure. The edible oil industry, in which the company operates, continues to be competitive, with market dynamics influenced by raw material prices, regulatory policies, and consumer demand patterns.
In summary, Gokul Refoils and Solvent’s stock has reached a significant low point at Rs.37.99, reflecting a combination of subdued long-term growth, elevated leverage, and modest profitability. While the company has demonstrated positive profit growth in recent quarters and maintains a strong liquidity position, the stock’s price performance remains under pressure relative to broader market indices and sector peers.
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