Active Clothing Co Receives 'Sell' Rating from MarketsMOJO, Weak Fundamentals and High Debt Cited

Active Clothing Co, a microcap company in the textile industry, has recently received a 'Sell' rating from MarketsMOJO on November 4, 2024. This downgrade is based on weak long-term fundamental strength, with a -0.40% CAGR growth in operating profits over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 4.89 times, indicating a low ability to service debt. The return on equity (avg) of 2.18% also suggests low profitability per unit of shareholders' funds.
In the latest quarter, the company's results were flat and it had the highest interest expense of Rs 2.48 crore. However, there are some bullish factors for the stock, such as being in a mildly bullish range and having positive indicators like MACD, Bollinger Band, and KST.

Active Clothing Co also has an attractive valuation with a ROCE of 8.8 and a 1.8 enterprise value to capital employed. The stock is currently trading at a discount compared to its average historical valuations. In the past year, the stock has outperformed the market (BSE 500) with a return of 72.07%, while its profits have risen by 115%. The PEG ratio of the company is also low at 0.3.

The majority shareholders of Active Clothing Co are the promoters, indicating their confidence in the company's performance. Despite the recent downgrade, the stock has shown market-beating performance and has the potential for future growth. However, investors should carefully consider the company's financials and market conditions before making any investment decisions.