Federal-Mogul Goetze (India) downgraded to 'Hold' despite positive results

Federal-Mogul Goetze (India) is a smallcap company in the auto ancillary industry. Despite positive results in the last quarter, MarketsMOJO has downgraded its stock call to 'Hold' on July 5, 2024. This is due to the company's low Debt to Equity ratio, which is currently at 0 times.
However, there are some positive factors to note. The company's ROCE (HY) is at its highest at 16.60%, and it has a significant amount of cash and cash equivalents at Rs 418.17 crore. Its PBDIT (Q) is also at its highest at Rs 72.38 crore. Technically, the stock is in a mildly bullish range, with its MACD and KST technical factors also showing a bullish trend.

With a ROE of 11.4, the company has a very attractive valuation with a price to book value of 2.2. It is also currently trading at a discount compared to its average historical valuations. However, its long-term growth has been poor, with an annual growth rate of -2.01% in operating profit over the last 5 years.

Institutional investors have also decreased their stake in the company by -0.52% over the previous quarter, holding only 1.07% collectively. This could be a cause for concern as institutional investors have better resources to analyze a company's fundamentals.

In the last 1 year, the stock has underperformed the market, generating a return of only 16.75% compared to the market's (BSE 500) return of 37.85%. Overall, while Federal-Mogul Goetze (India) has some positive aspects, it is currently facing some challenges that have led to its stock being downgraded to 'Hold'. Investors should carefully consider these factors before making any investment decisions.