Aarti Drugs Receives 'Sell' Rating from MarketsMOJO, Poor Growth and Bearish Trend Indicate Downgrade

Aarti Drugs, a smallcap pharmaceutical company, has recently received a 'Sell' rating from MarketsMOJO on November 14, 2024. This downgrade is based on several factors, including poor long-term growth with net sales and operating profit growing at a rate of only 6.68% and 9.97% respectively over the last 5 years. Additionally, the company's results for September 2024 have been flat, with the lowest ROCE (return on capital employed) at 12.85% and a decrease in PBT (profit before tax) and PAT (profit after tax) by -16.0% and -10.7% respectively.
Technically, the stock is in a bearish range and the technical trend has deteriorated from mildly bearish on November 14, 2024. Multiple factors such as MACD, Bollinger Band, and KST also indicate a bearish trend for the stock. Furthermore, Aarti Drugs has consistently underperformed against the benchmark over the last 3 years, with a return of -2.78% in the last 1 year and underperformance against BSE 500 in each of the last 3 annual periods.

However, the company does have some positive factors, such as high management efficiency with a ROCE of 19.83% and a strong ability to service debt with a low Debt to EBITDA ratio of 1.47 times. Additionally, with a ROCE of 12.7, the stock is currently trading at an attractive valuation with a 2.6 Enterprise value to Capital Employed. It is also trading at a discount compared to its average historical valuations. However, despite these positives, the stock has still seen a decrease in profits by -15.5% over the past year.

The majority shareholders of Aarti Drugs are the promoters, indicating their confidence in the company. However, based on the current market conditions and the company's performance, MarketsMOJO has downgraded the stock to 'Sell'. Investors should carefully consider these factors before making any investment decisions.