Majestic Auto Faces Volatility Amid Weak Long-Term Fundamentals and Profit Decline

Majestic Auto has experienced significant volatility today, hitting a new 52-week low of Rs. 271. The stock opened with a notable loss of 9.67% but managed to recover slightly, reaching an intraday high of Rs. 307, reflecting a 2.33% increase from its lowest point. Over the past two days, Majestic Auto has shown a consecutive gain of 2.5%, outperforming its sector by 4.07%.
Despite this short-term performance, the company's long-term fundamentals appear weak. Over the last five years, Majestic Auto has reported a -15.22% compound annual growth rate (CAGR) in operating profits, and its ability to service debt is concerning, with an EBIT to interest ratio of only 1.82. The return on equity stands at a low 2.89%, indicating limited profitability relative to shareholder funds.

In the broader market context, the Sensex has shown resilience after a significant gap down opening, currently trading at 79,750.23, down 0.73%. While Majestic Auto's stock has generated a modest return of 3.39% over the past year, it has faced a substantial decline in profits, down 56.2%.