Accel downgraded to 'Sell' by MarketsMOJO due to high debt and low profitability.

Accel, a microcap IT hardware company, has recently been downgraded to a 'Sell' by MarketsMOJO on August 5th, 2024. This decision was based on several factors, including the company's high debt to EBITDA ratio of 7.35 times, indicating a low ability to service debt. Additionally, the company's return on equity has been consistently low at 2.34%, showing a lack of profitability per unit of shareholders' funds.
Technically, the stock is currently in a Mildly Bearish range, with the technical trend deteriorating from Sideways on August 1st, 2024. Since then, the stock has generated -2.55% returns. Multiple indicators, such as MACD, Bollinger Band, and KST, also suggest a bearish outlook for the stock.

In the past year, Accel has significantly underperformed the market, with negative returns of -20.13% compared to the market's 32.89% returns. However, the company has shown healthy long-term growth, with net sales growing at an annual rate of 88.18% and operating profit at 43.50%.

In March 2024, Accel reported positive results, with PBT LESS OI(Q) at Rs 1.16 crore growing at 928.57% and PAT(Q) at Rs 1.19 crore growing at 274.8%. The company's net sales also reached a record high of Rs 49.87 crore.

With a ROCE of 7.8, Accel currently has an attractive valuation with a 1.5 enterprise value to capital employed. The stock is also trading at a discount compared to its average historical valuations. Despite the negative returns in the past year, the company's profits have risen by 27.2%, resulting in a PEG ratio of 1.3.

It is worth noting that the majority shareholders of Accel are the promoters themselves. This may indicate a lack of interest from external investors, but it also means that the promoters have a vested interest in the company's success. Overall, while Accel may currently be facing some challenges, it also has potential for growth and attractive valuations. Investors should carefully consider these factors before making any decisions regarding the stock.