homemarket Newsstocks NewsParag Milk Foods: A rollercoaster year with promising signs amidst challenges
Parag Milk Foods: A rollercoaster year with promising signs amidst challenges
Parag Milk Food's stock has experienced a remarkable year with substantial gains and unprecedented trading volumes. The investment by the Sixth Sense India Opportunities Fund adds an intriguing dimension to the company's story. However, some analysts remain cautious on the stock as a closer examination of the company's financials reveals some challenges.
Mumbai-based Parag Milk Foods, India's largest producer of cow ghee and the owner of leading ghee and cheese brands — 'Govardhan' and 'Go', has recently garnered significant attention as the company's shares have experienced a rollercoaster year, characterised by substantial gains, massive trading volumes, and intriguing developments.
The stock has been on a remarkable upward trajectory this year. It has surged by 97 percent, making it a standout performer in the stock market. This surge was further exemplified by a substantial 16 percent increase in the stock's value on a single trading day — Friday.
For Parag Milk, this trading day was exceptional in terms of volumes as well. The National Stock Exchange (NSE) recorded a staggering 1.7 crore shares being exchanged, a figure that eclipsed the volumes observed in the previous seven trading sessions. In terms of value, a whopping Rs 343 crore was traded on the NSE alone, a sum equivalent to the total value traded in the preceding 13 trading sessions.
The surge in trading volumes and the substantial price increase indicate a growing momentum for Parag Milk's stock.
In June, the Sixth Sense India Opportunities Fund made an interesting move by acquiring 2 lakh shares of Parag Milk through the open market.
While Parag Milk's recent performance is undoubtedly impressive, it's important to remain cautious, say analysts. A closer examination of the company's financials reveals some challenges. Over the past five years, the company has reported a negative compound annual growth rate (CAGR) of 19 percent in terms of profitability.
Additionally, its return on equity (RoE) over the same period stands at a negative 6 percent. These figures highlight the need for a critical assessment of the company's long-term sustainability and growth prospects.
For more details, watch the accompanying video
(Edited by : C H Unnikrishnan)
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