MarketsMOJO Downgrades XT Global Infotech to 'Sell' Due to Negative Results and Low Investor Interest

XT Global Infotech, a microcap IT software company, has recently been downgraded to a 'Sell' by MarketsMOJO on June 18, 2024. This downgrade is based on the company's negative results in March 2024, with a significant decrease of -73.8% in its PAT(Q) at Rs 0.89 crore. Additionally, its ROCE(HY) has hit a low of 8.69%, and its DEBTORS TURNOVER RATIO(HY) has also decreased to 3.35 times.
Despite being a microcap company, XT Global Infotech has not gained much interest from domestic mutual funds, with only 0.01% of the company's shares being held by them. This could indicate that either the mutual funds are not comfortable with the company's current price or its business.

In the past year, XT Global Infotech has underperformed the market, with a return of only 5.70%, compared to the market's (BSE 500) return of 37.27%. However, the company does have a low Debt to Equity ratio (avg) of 0.32 times, indicating a healthy financial position.

On a positive note, the company has shown a healthy long-term growth rate, with its Net Sales growing at an annual rate of 6.26% and Operating profit at 104.97%. The technical trend for the stock is currently sideways, with no clear price momentum. However, it has improved from a Mildly Bearish trend on June 18, 2024, and has generated a return of 3.66% since then.

With a ROCE of 7.2, XT Global Infotech is currently trading at an attractive valuation, with an Enterprise value to Capital Employed ratio of 2.9. The stock is also trading at a discount compared to its average historical valuations. However, its profits have fallen by -25.9% in the past year, despite generating a return of 5.70%. Based on these factors, MarketsMOJO has downgraded the stock to a 'Sell'.