Majestic Auto Faces Volatility Amid Concerns Over Long-Term Financial Health

Majestic Auto has experienced significant volatility today, reaching a new 52-week low of Rs. 271. The stock opened with a notable loss of 9.67% but managed to recover slightly, touching an intraday high of Rs. 307, ultimately outperforming its sector by 4.07%. Over the past two days, Majestic Auto has shown a modest gain of 2.5%.
Despite this recent uptick, the stock's long-term fundamentals remain concerning. The company has reported a -15.22% compound annual growth rate (CAGR) in operating profits over the last five years, indicating weak financial health. Additionally, its ability to service debt is under scrutiny, with an average EBIT to interest ratio of 1.82. The return on equity stands at a low 2.89%, reflecting limited profitability.

In the broader market context, the Sensex has shown resilience after a significant gap down opening, currently trading at 79,750.23. However, Majestic Auto's performance over the past year has lagged behind the Sensex, with a return of just 3.39% compared to the index's 10.09%. The stock's technical indicators suggest a bearish trend, further complicating its market position.