DCM Shriram, a midcap player in the diversified industry, has recently faced a downgrade in its stock call to ‘Sell’ by MarketsMOJO as of January 6, 2025. This decision stems from several concerning financial indicators. Over the past five years, the company’s operating profit has grown at an annual rate of just 8.53%, raising concerns about its long-term growth prospects.
The company has reported negative results for three consecutive quarters, with profit before tax (PBT) falling by 74.8% to Rs 41.88 crore and profit after tax (PAT) declining by 48.7% to Rs 62.92 crore. Additionally, its operating cash flow has reached a low of Rs 793.81 crore.
Despite being a midcap entity, DCM Shriram has attracted only 0.85% investment from domestic mutual funds, which may indicate a lack of confidence in the company’s current valuation or business model. The stock has consistently underperformed against benchmarks, generating a return of -1.22% over the past year and underperforming the BSE 500 for three consecutive years. However, the company maintains a low debt-to-EBITDA ratio of 0.53, suggesting a strong ability to service its debt.
