Jumbo Bag Receives 'Sell' Rating Due to Weak Fundamentals, But Shows Positive Growth and Valuation

Jumbo Bag, a microcap company in the packaging industry, has recently received a 'Sell' rating from MarketsMOJO. This downgrade is based on the company's weak long-term fundamental strength, with a -0.68% CAGR growth in operating profits over the last 5 years. Additionally, Jumbo Bag has a high debt to EBITDA ratio of 0 times, indicating a low ability to service debt. The company's return on equity (avg) of 8.30% also suggests low profitability per unit of shareholders' funds.
However, there are some positive factors to note. Jumbo Bag reported positive results in March 2024, with a PAT (9M) of Rs 2.54 crore, showing a growth of 106.50%. The EPS (Q) also reached its highest at Rs 0.72. Technically, the stock is in a mildly bullish range, with its MACD and KST technical factors also being bullish.

In terms of valuation, Jumbo Bag has a fair valuation with a ROCE of 7.7 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. Over the past year, while the stock has generated a return of 103.16%, its profits have risen by 65.9%. The PEG ratio of the company is 0.2.

The majority shareholders of Jumbo Bag are non-institutional investors. Despite the recent downgrade, the company has a track record of market-beating performance in the long term as well as the near term. In the last 1 year, Jumbo Bag has generated a return of 103.16% and has outperformed BSE 500 in the last 3 years, 1 year, and 3 months.