Agarwal Industrial Corporation downgraded to 'Sell' by MarketsMOJO due to flat results and low mutual fund ownership

Agarwal Industrial Corporation, a smallcap company in the petrochemical industry, has recently been downgraded to a 'Sell' by MarketsMOJO on April 22, 2024. This downgrade is based on the company's flat results in December 2023, with a decrease of 5.8% in net sales. The stock is also currently in a mildly bearish range, with technical factors such as MACD and KST also showing a bearish trend.
One of the reasons for this downgrade could be the fact that despite being a smallcap company, domestic mutual funds hold only 0% of the company. This could indicate that they are not comfortable with the current price or the business of the company. However, Agarwal Industrial Corporation does have some positive factors, such as a low debt to EBITDA ratio of 1.25 times and a healthy long-term growth rate of 31.81% in net sales and 40.77% in operating profit.

In terms of valuation, the company has a very attractive ROCE of 20.4 and a discount compared to its average historical valuations. Additionally, in the past year, the stock has outperformed the market with a return of 54.63%, while its profits have also increased by 13.5%. This gives the company a PEG ratio of 1, which is considered to be a good valuation indicator.

With a market cap of Rs 1,264 crore, Agarwal Industrial Corporation is the second biggest company in the petrochemical sector, behind Manali Petrochem. It also constitutes 21.99% of the entire sector, with annual sales of Rs 2,008.39 crore, which is 30.87% of the industry. While the recent downgrade may cause concern for investors, the company's strong ability to service debt and its market-beating performance in the past year could still make it an attractive investment opportunity.