Strong Quarterly Performance Drives Momentum
Creative Newtech’s recent quarterly results have been a key catalyst behind the stock’s positive price action. The company reported a profit before tax excluding other income (PBT LESS OI) of ₹17.96 crores, marking an impressive growth of 83.64% compared to the previous period. Net sales surged by 59.39% to ₹655.75 crores, while the profit before depreciation, interest, and tax (PBDIT) reached a record high of ₹22.88 crores. These figures underscore the company’s ability to generate healthy operational earnings and revenue growth, which has resonated well with investors.
Moreover, Creative Newtech’s long-term growth trajectory remains strong, with net sales expanding at an annual rate of 37.10% and operating profit growing at 35.17%. The company’s return on capital employed (ROCE) stands at a respectable 13.4%, and it maintains an attractive valuation with an enterprise value to capital employed ratio of 2.7. This valuation metric indicates that the stock is trading at a discount relative to its peers’ historical averages, providing further appeal to value-conscious investors.
Fundamentals that don't lie! This Small Cap from Trading shows consistent growth and price strength over time. A reliable pick you can truly count on.
- - Strong fundamental track record
- - Consistent growth trajectory
- - Reliable price strength
Technical Indicators and Investor Activity Support Uptrend
On the technical front, Creative Newtech is trading above all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This positioning signals sustained buying interest and positive momentum in the stock. Additionally, delivery volume on 02 Dec surged by 135.57% to 12,590 shares compared to the five-day average, indicating rising investor participation and confidence in the stock’s near-term prospects.
Liquidity remains adequate, with the stock’s traded value supporting trade sizes of approximately ₹0.02 crores, ensuring that investors can transact without significant price impact. The stock also outperformed its sector by 2.28% on the day, further highlighting its relative strength within its industry group.
Long-Term Performance and Institutional Concerns Temper Optimism
Despite the recent gains, Creative Newtech’s longer-term performance presents a mixed picture. Year-to-date, the stock has declined by 23.07%, and over the past year, it has underperformed the broader market significantly, delivering a negative return of 29.20% compared to the Sensex’s 6.25% gain. This underperformance contrasts with the company’s profit growth of 10.5% over the same period, resulting in a relatively high price-to-earnings-growth (PEG) ratio of 4.6, which may suggest that the stock is expensive relative to its earnings growth.
Institutional investor participation has also waned, with a 0.62% reduction in stake over the previous quarter, leaving institutions holding just 1.35% of the company. Given that institutional investors typically possess greater analytical resources and market insight, their reduced involvement could signal caution regarding the stock’s fundamentals or outlook.
Holding Creative Newtech from Miscellaneous? See if there's a smarter choice! SwitchER compares it with peers and suggests superior options across market caps and sectors!
- - Peer comparison ready
- - Superior options identified
- - Cross market-cap analysis
Balancing Growth with Valuation and Market Sentiment
In summary, Creative Newtech’s recent price rise is primarily driven by strong quarterly earnings growth, favourable technical indicators, and increased retail investor interest. The company’s solid sales and profit expansion, coupled with a valuation discount relative to peers, provide a compelling case for the stock’s near-term strength. However, the stock’s underperformance over the past year and declining institutional ownership highlight ongoing challenges that investors should consider carefully.
For investors weighing the merits of Creative Newtech, it is essential to balance the encouraging operational results and price momentum against the broader market context and investor sentiment. While the stock shows promise as a fundamentally sound small cap with consistent growth, the cautious stance of institutional investors and its historical underperformance suggest that a measured approach is prudent.
Get 2 full years of MojoOne Premium for only Rs. 12,999. Subscribe for 1 year and we'll add another year FREE. Offer valid for a limited time. Start Saving Now →
