Globus Spirits Receives 'Hold' Rating from MarketsMOJO, Strong Debt Servicing and Growth Potential

On 31st July 2024, MarketsMOJO upgraded its stock call on Globus Spirits, a smallcap company in the breweries industry, to 'Hold'. This decision was based on various factors that indicate a neutral outlook for the company.

One of the key reasons for the 'Hold' rating is the company's strong ability to service its debt. With a low Debt to EBITDA ratio of 0.84 times, Globus Spirits has a healthy balance sheet. Additionally, the company has shown consistent long-term growth, with its Net Sales growing at an annual rate of 19.66% and Operating profit at 26.97%.

From a technical standpoint, the stock is currently in a Mildly Bullish range. The technical trend has improved from Sideways on 31st July 2024, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish sentiment.

Moreover, with a ROCE of 8.6, the stock is currently trading at a Very Attractive valuation with a 2.5 Enterprise value to Capital Employed. This is a discount compared to its average historical valuations, making it an attractive option for investors.

However, the company did face some negative results in March 2024. Its PAT(Q) at Rs 0.38 crore has fallen by -98.9%, while its Operating profit to Interest (Q) and Operating profit to Net Sales (Q) have also hit their lowest levels at 3.25 times and 3.47% respectively.

Despite being a smallcap company, domestic mutual funds hold only 0.72% of Globus Spirits. This could be due to their capability to conduct in-depth research on companies, and their small stake may signify either their discomfort with the current price or the business.

In the last 1 year, the stock has underperformed the market, generating a return of only 0.06% compared to the market (BSE 500) returns of 37.33%. This could be a cause for concern for potential investors.

Overall, while Globus Spirits has shown promising growth and has a strong ability to service its debt, there are some factors that may warrant caution. Investors are advised to do their own research and make an informed decision before investing in the company.