XT Global Infotech downgraded to 'Sell' by MarketsMOJO, profits decrease by -73.8%

XT Global Infotech, a microcap IT software company, has recently been downgraded to a 'Sell' by MarketsMOJO on July 1, 2024. This decision was based on the company's negative results in March 2024, with a significant decrease in its PAT(Q) at Rs 0.89 crore, falling by -73.8%. 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 being held by them. This could indicate that they are not comfortable with the company's current price or its business.

In the past year, the stock has underperformed the market, with a return of only 3.23%, compared to the market's (BSE 500) return of 37.64%. However, the company does have a low Debt to Equity ratio (avg) of 0.32 times, indicating a healthy financial position.

On the positive side, XT Global Infotech has shown long-term growth, with its Net Sales growing at an annual rate of 6.26% and its Operating profit at 104.97%. However, the technical trend for the stock is currently sideways, with no clear price momentum.

With an ROCE of 7.2, the stock is currently trading at an attractive valuation, with an Enterprise value to Capital Employed ratio of 2.8. It is also trading at a discount compared to its average historical valuations. However, in the past year, while the stock has generated a return of 3.23%, its profits have fallen by -25.9%.

In conclusion, while XT Global Infotech may have some positive aspects, the recent downgrade to 'Sell' by MarketsMOJO and its underperformance in the market may be cause for concern for potential investors. It is important to carefully consider all factors before making any investment decisions.