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

Majestic Auto has experienced significant volatility today, hitting a new 52-week low of Rs. 281.9. This decline marks a notable performance dip, as the stock has fallen by 7.3% over the last two days, following a gap down opening with a loss of 4.87%. Despite this downturn, Majestic Auto outperformed its sector, which has seen an overall decline of 5.99%.
The company's long-term fundamentals appear weak, with a compounded annual growth rate (CAGR) of -15.22% in operating profits over the past five years. Additionally, Majestic Auto's ability to service its debt is concerning, reflected in a low EBIT to interest ratio of 1.82. The return on equity stands at a modest 2.89%, indicating limited profitability relative to shareholder funds.

In terms of technical indicators, the stock is trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, suggesting a bearish trend. Over the past year, Majestic Auto has generated a return of -7.55%, while its profits have decreased by 56.2%. The stock's valuation remains high, with a price-to-book ratio of 0.5, indicating it is trading at a discount compared to its peers.