Stock Price Movement and Market Context
On the day the new low was recorded, Trans India House Impex Ltd outperformed its sector by 3.34%, despite the broader market environment showing signs of weakness. The Sensex opened 100.91 points lower and was trading at 81,262.09, down 0.34%. The index has experienced a three-week consecutive decline, losing 2.77% over this period. Meanwhile, the IT - Hardware sector, within which Trans India operates, fell by 2.16% on the same day.
Trans India’s stock is currently trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling sustained downward momentum. The stock’s 52-week high was Rs.21.60, highlighting a steep decline of approximately 74.4% from its peak.
Financial Performance and Fundamental Weaknesses
The company’s financial indicators reveal persistent challenges. Over the past year, Trans India House Impex Ltd has delivered a negative return of 70.21%, starkly contrasting with the Sensex’s positive 7.86% gain over the same period. This underperformance extends beyond the last year, with the stock lagging behind the BSE500 index over the last three years, one year, and three months.
Recent quarterly results showed flat performance, with the PBDIT (Profit Before Depreciation, Interest and Taxes) at a low of Rs. -0.16 crore. The operating profit to net sales ratio for the quarter was negative at -1.42%, indicating that the company is currently not generating operating profits from its sales. The half-yearly Return on Capital Employed (ROCE) was recorded at 3.32%, one of the lowest in recent periods, reflecting limited efficiency in capital utilisation.
Long-term fundamental strength remains weak, as evidenced by the company’s high debt burden. The Debt to EBITDA ratio stands at 8.82 times, signalling a low capacity to service debt obligations. This elevated leverage ratio contributes to the company’s cautious market grading.
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Valuation and Comparative Metrics
Despite the weak financials, Trans India House Impex Ltd’s valuation metrics present a contrasting picture. The company’s ROCE stands at 1.5, and it has an enterprise value to capital employed ratio of 0.6, which is considered very attractive. This suggests that the stock is trading at a discount relative to its peers’ average historical valuations.
However, this valuation discount accompanies a significant decline in profitability, with profits falling by 91.9% over the past year. The stock’s Mojo Score is 26.0, categorised as a Strong Sell, reflecting the deteriorated financial health and market sentiment. This rating was downgraded from Sell on 12 Jun 2024, indicating a worsening outlook over the recent period.
Shareholding and Market Capitalisation
The majority of Trans India House Impex Ltd’s shares are held by non-institutional investors. The company’s market capitalisation grade is 4, which aligns with its current valuation and liquidity profile within the Industrial Manufacturing sector.
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Sector and Broader Market Trends
The Industrial Manufacturing sector, to which Trans India House Impex Ltd belongs, has faced headwinds in recent months. The broader market indices have shown mixed signals, with the NIFTY PSU index hitting a new 52-week high on the same day Trans India’s stock touched its low. The Sensex’s 50-day moving average remains above its 200-day moving average, indicating a longer-term positive trend, but the index’s recent three-week decline highlights short-term volatility.
Within this context, Trans India’s stock performance stands out for its pronounced weakness, underscoring company-specific factors as the primary drivers behind the price decline rather than sector-wide trends alone.
Summary of Key Financial Indicators
To summarise, Trans India House Impex Ltd’s key financial metrics as of the latest reporting period include:
- 52-week low price: Rs.5.52
- 52-week high price: Rs.21.60
- One-year stock return: -70.21%
- Debt to EBITDA ratio: 8.82 times
- ROCE (Half Yearly): 3.32%
- PBDIT (Quarterly): Rs. -0.16 crore
- Operating profit to net sales (Quarterly): -1.42%
- Mojo Score: 26.0 (Strong Sell)
- Market Cap Grade: 4
These figures collectively illustrate the challenges faced by the company in maintaining profitability and managing its debt levels, which have contributed to the stock’s decline to its current 52-week low.
Conclusion
Trans India House Impex Ltd’s fall to Rs.5.52 marks a significant milestone in its recent stock price trajectory, reflecting a combination of subdued financial results, high leverage, and underwhelming returns relative to market benchmarks. While the stock trades at a valuation discount compared to peers, the company’s financial health and performance metrics remain areas of concern. The stock’s Strong Sell rating and deteriorated Mojo Grade further underscore the challenges faced by the company in the current market environment.
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