AVG Logistics Downgraded to 'Sell' by MarketsMOJO, High Debt and Poor Growth Cited.

AVG Logistics, a microcap logistics company, has recently been downgraded to a 'Sell' by MarketsMOJO on July 8, 2024. This downgrade is based on several factors, including the company's high debt to EBITDA ratio of 3.45 times, indicating a low ability to service debt. Additionally, the company has shown poor long-term growth with net sales growing at an annual rate of 8.90% and operating profit at 16.34% over the last 5 years.
In March 2024, AVG Logistics declared negative results after two consecutive positive quarters, with PBT LESS OI(Q) at Rs 4.44 crore falling at -84.92% and PAT(Q) at Rs 11.68 crore falling at -58.2%. The operating profit to net sales (Q) was also at its lowest at 15.52%.

The technical trend for the stock is currently sideways, indicating no clear price momentum. However, it has improved from mildly bearish on July 8, 2024, and has generated -4.48% returns since then.

On a positive note, AVG Logistics has a very attractive valuation with a ROCE of 11 and an enterprise value to capital employed ratio of 2.1. The stock is also trading at a discount compared to its average historical valuations. In the past year, while the stock has generated a return of 73.56%, its profits have risen by 178%, resulting in a low PEG ratio of 0.2.

Institutional investors have also shown increasing interest in the company, with their stake increasing by 1.51% over the previous quarter. They currently hold 9.46% of the company, indicating their confidence in its fundamentals.

Despite its market-beating performance of 73.56% in the last year, AVG Logistics' recent downgrade to 'Sell' by MarketsMOJO raises concerns about its future potential. Investors should carefully consider all factors before making any investment decisions.