Arex Industries Receives 'Sell' Rating from MarketsMOJO

Arex Industries, a microcap textile company, has recently received a 'Sell' rating from MarketsMOJO on December 19, 2023. This downgrade is based on weak long-term fundamental strength, with a -13.23% CAGR growth in operating profits over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 3.29 times, indicating a low ability to service debt. Arex Industries has also underperformed the market in the last year, with negative returns of -6.57% compared to the market's 20.81% returns.
Another concerning factor is that 42.28% of the promoter shares are pledged, which can put additional downward pressure on the stock prices in falling markets. However, there have been some positive results for the company in September 2023, with the highest net sales and PBDIT in the quarter. The operating profit to net sales ratio was also at its highest at 18.75%.

On a technical level, the stock's trend is currently sideways, indicating no clear price momentum. The stock's technical trend has deteriorated since December 19, 2023, when it was mildly bullish, and has generated -0.69% returns since then. However, with a ROCE of 14.4 and an attractive valuation with a 1.4 enterprise value to capital employed, the stock may still be considered undervalued.

It is important to note that over the past year, while the stock has generated negative returns, its profits have also fallen by -34.1%. This may be a cause for concern for potential investors. Overall, Arex Industries' recent downgrade to a 'Sell' rating highlights the company's weak performance and financial health, making it a risky investment option.