CCL International receives 'Hold' rating after strong financial results and bullish technical trend

CCL International, a microcap trading company, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company reported very positive results in March 2024, with a growth in net sales of 86.61%. The company has also declared positive results for the last two consecutive quarters, with higher net sales of Rs 26.76 crore and a PBDIT of Rs 2.32 crore in the latest quarter.
Technically, the stock is in a mildly bullish range and the technical trend has improved from sideways on July 1, 2024. Multiple factors, such as MACD, Bollinger Band, and KST, indicate a bullish outlook for the stock.

In terms of valuation, CCL International has a very attractive ROCE of 2.5 and an enterprise value to capital employed ratio of 1.1. The stock is currently trading at a discount compared to its average historical valuations. Additionally, in the past year, the stock has generated a return of 20.71%, while its profits have risen by 205.8%. This gives the company a low PEG ratio of 0.2.

However, there are some concerns regarding the company's long-term fundamental strength. Over the last 5 years, CCL International has seen a negative CAGR growth in operating profits of -215.66%. The company's ability to service its debt is also weak, with a poor EBIT to interest ratio of 0.25. Furthermore, the company has a low return on equity of 2.32%, indicating low profitability per unit of shareholders' funds.

In the past year, CCL International has underperformed the market, with a return of 20.71% compared to the market's return of 37.64%. The majority shareholders of the company are the promoters, which may be a positive sign for investors.

Overall, while CCL International has shown positive results in the short term, there are some concerns about its long-term fundamental strength. Investors may want to hold onto the stock for now and monitor its performance closely.