Aarti Drugs Downgraded to 'Sell' by MarketsMOJO Due to Poor Growth and Negative Financial Results

Aarti Drugs, a smallcap pharmaceutical company, has recently been downgraded to a 'Sell' by MarketsMOJO on October 21, 2024. This decision was based on the company's poor long-term growth, with net sales and operating profit only growing at an annual rate of 8.76% and 8.17% respectively over the last 5 years.
In addition, the company's recent financial results for June 2024 have also been negative, with a -22.5% decrease in PAT(Q) and the lowest operating profit to interest ratio at 7.46 times. The net sales for the quarter were also at their lowest at Rs 555.34 crore.

Furthermore, Aarti Drugs has consistently underperformed against the benchmark over the last 3 years, with a -4.64% return in the last year alone. This is in contrast to its high management efficiency, with a ROCE of 19.83%, and its strong ability to service debt with a low Debt to EBITDA ratio of 1.47 times.

From a technical standpoint, the stock's trend is currently sideways, indicating no clear price momentum. The Bollinger Band has also been sideways since October 21, 2024. However, the stock does have an attractive valuation with a ROCE of 14.4 and a 2.8 Enterprise value to Capital Employed.

It is worth noting that Aarti Drugs is majority owned by its promoters. While the stock has generated a return of -4.64% in the past year, its profits have also fallen by -12.5%. Overall, MarketsMOJO's downgrade to 'Sell' for Aarti Drugs is based on its underperformance and lack of growth potential in the pharmaceutical industry.