Bata India Downgraded to 'Sell' by MarketsMOJO Due to Poor Long-Term Growth and Underperformance.

Bata India, a midcap company in the consumer durables industry, has recently been downgraded to a 'Sell' by MarketsMOJO. This decision was based on the company's poor long-term growth, with an annual operating profit growth rate of -3.71% over the last 5 years. In addition, the company's results for the quarter ending June 2024 showed a decline in profit before tax of -18.8%, with non-operating income accounting for 69.17% of the profit before tax.
The stock has also underperformed the BSE 500 index in the last 3 years, 1 year, and 3 months, with a return of -17.67%. However, Bata India does have a strong ability to service debt, with a low debt to EBITDA ratio of 0.55 times. The technical trend for the stock is currently sideways, indicating no clear price momentum.

In terms of valuation, Bata India has a fair valuation with a ROCE of 18 and an enterprise value to capital employed ratio of 7.7. The stock is currently trading at a discount compared to its average historical valuations. Despite the negative return of -17.67% in the past year, the company's profits have actually increased by 15.9%, resulting in a PEG ratio of 3.2.

It is worth noting that Bata India has a high institutional holding of 35.14%, indicating that these investors have better capability and resources to analyze the fundamentals of the company compared to most retail investors. Overall, with its recent downgrade to 'Sell' and below par performance in both the long and near term, investors may want to approach Bata India with caution.