September 26, 2024
Top 10 Stock Grasim Hold Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Grasim – Top 10 Stock in Nifty 50 India Index CNX Nifty 50
Grasim is listed as a top 10 stock on September 26, 2024 in the market index CNX Nifty 50 because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is growing above average and professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 25 (25% performer), Obermatt assesses an overall hold recommendation for Grasim on September 26, 2024.
Snapshot: Obermatt Ranks
| Country | India |
| Industry | Construction Materials |
| Index | Good Governace Growth Markets, CNX Nifty 50 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Grasim Hold
| 360 METRICS | September 26, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 5 |
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| GROWTH | ||||||||
| GROWTH | 85 |
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| SAFETY | ||||||||
| SAFETY | 7 |
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| SENTIMENT | ||||||||
| SENTIMENT | 67 |
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| 360° VIEW | ||||||||
| 360° VIEW | 25 |
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ANALYSIS: With an Obermatt 360° View of 25 (better than 25% compared with alternatives), overall professional sentiment and financial characteristics for the stock Grasim are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Grasim. The consolidated Growth Rank has a good rank of 85, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 85% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 67, which means that professional investors are more optimistic about the stock than for 67% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 5, which means that the share price of Grasim is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 95% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 7, which means that the company has a financing structure that is riskier than those of 93% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 25, Grasim is worse than 75% of all alternative stock investment opportunities based on the Obermatt Method. Only half of the consolidated Obermatt Ranks exhibit excellent performance, so one needs to take a close look. Growth is above-average (Growth Rank of 85), and professional market sentiment is positive (Sentiment Rank of 67), but value and safety are below average. The Safety Rank is the least significant of the four consolidated ranks, because it only reflects financing practices. In the case of high growth, aggressive financing is a good thing. So the question is: How to assess below-average value against above-average growth and sentiment? Growth may be the strongest driver of the investment rationale in this case, which is reflected in institutional investors' opinions. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much do you sacrifice value for growth? You can use the following rule of thumb: If you take 100 minus the growth rank, you arrive at a possibly minimum level for the value rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the growth rank is above 60. Sometimes market sentiment just extrapolates the past, but sometimes it reflects reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Grasim positive
ANALYSIS: With an Obermatt Sentiment Rank of 67 (better than 67% compared with alternatives), overall professional sentiment and engagement for the stock Grasim is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Grasim. Analyst Opinions are at a rank of 80 (better than 80% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. Analyst Opinions Change is also positive and has a rank of 74 which means that currently, stock research experts are getting even more optimistic about investments in Grasim. But Market Pulse has a low rank of 22, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 78% of competitors). This is an essential sign of caution, as it could be the forebearer of bad news. Professional Investors are also somewhat absent with a rank of 39, which means that, currently, professional investors hold less stock in this company than in 61% of alternative investment opportunities. Pros tend to invest in other companies. This is expected if the company is of a smaller size (medium or smaller). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 67 (more positive than 67% compared with investment alternatives), Grasim has a reputation among professional investors that is above-average compared with that of its competitors. While the general news feeds in the professional market are negative, the analyst recommendations are optimistic about the company, and even increase their ratings despite the negative news. This is an ambiguous situation with positive and negative signals from the professional side. Investors should be on the lookout for negative news but not worry too much about it as long as the overall news is still positive. ...read more
Value Strategy: Grasim Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 5 (worse than 95% compared with alternatives), Grasim shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Grasim. Price-to-Sales is 15 which means that the stock price compared with what market professionals expect for future profits is higher than 85% of comparable companies, indicating a low value concerning Grasim's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 42, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Grasim. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 1 and Dividend Yield, which is lower than 85% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 5, is a sell recommendation based on Grasim's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Grasim? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Grasim? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Grasim may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. ...read more
Growth Strategy: Grasim Growth Momentum high
| GROWTH METRICS | September 26, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 62 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 17 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 85 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 87 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 85 |
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ANALYSIS: With an Obermatt Growth Rank of 85 (better than 85% compared with alternatives) for 2024, Grasim shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Grasim. Sales Growth has a rank of 62 which means that currently, professionals expect the company to grow more than 62% of its competitors. Capital Growth is also above 17% of competitors with a rank of 85, and Stock Returns with the rank of 87 is also an outperformance. Only Profit Growth is low with a rank of 17 which means that currently, professionals expect the company to grow its profits less than 83% of its competitors. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 85, is a buy recommendation for growth and momentum investors. All three operating growth indicators, namely revenue, profit, and capital growth, are showing improvements. This is a good indication of a company with a positive future. That might, at the same time, be the simple reason why profit growth is low. A growing company needs money and thus can't yet show high profit growth. Look out for signs in corporate communication about extra growth efforts costing time and money. If that is the case, Grasim is a good growth stock. ...read more
Safety Strategy: Grasim Debt Financing Safety risky
| SAFETY METRICS | September 26, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 18 |
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| REFINANCING | ||||||||
| REFINANCING | 9 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 22 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 7 |
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ANALYSIS: With an Obermatt Safety Rank of 7 (better than 7% compared with alternatives), the company Grasim has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Grasim is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with all three metrics below average for Grasim. Liquidity is at 22, meaning that the company generates less profit to service its debt than 78% of its competitors. This indicates that the company is on the riskier side when it comes to debt service. Even worse, Leverage is at a rank of 18, meaning the company has an above-average debt-to-equity ratio. It has more debt than 82% of its competitors. Finally, Refinancing is at a rank of 9 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 91% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 7 (worse than 93% compared with alternatives), Grasim has a financing structure that is significantly riskier than that of its competitors. This combination is rather dangerous in most situations. Only very promising companies with bright future outlooks and stellar reputations can operate with such risky financing.
Combined financial peformance: Grasim Lowest Financial Performance
| COMBINED PERFORMANCE | September 26, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 5 |
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| GROWTH | ||||||||
| GROWTH | 85 |
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| SAFETY | ||||||||
| SAFETY | 22 |
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| COMBINED | ||||||||
| COMBINED | 13 |
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ANALYSIS: With an Obermatt Combined Rank of 13 (worse than 87% compared with investment alternatives), Grasim (Construction Materials, India) shares have lower financial characteristics compared with similar stocks. Shares of Grasim are low in value (priced high) with a consolidated Value Rank of 5 (worse than 95% of alternatives), and are riskily financed (Safety Rank of 7, which means above-average debt burdens) but show above-average growth (Growth Rank of 85). ...read more
RECOMMENDATION: A Combined Rank of 13, is a sell recommendation based on Grasim's financial characteristics. As the company Grasim shows low value with an Obermatt Value Rank of 5 (95% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 85% of comparable companies (Obermatt Growth Rank is 85). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 7 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Grasim, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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