Bemco Hydraulics Downgraded to 'Sell' by MarketsMOJO After Negative Quarter Results

Bemco Hydraulics, a microcap company in the engineering industry, has recently been downgraded to a 'Sell' by MarketsMOJO on November 13, 2024. This decision was based on the company's negative results in the June 2024 quarter, after four consecutive positive quarters. The net sales have fallen by 36.11%, while the profits have decreased by 75.4%. The PBDIT (Profit Before Depreciation, Interest, and Taxes) has also reached its lowest at Rs 1.89 crore.
One of the main reasons for the downgrade is the company's expensive valuation, with a 3.9 Enterprise value to Capital Employed and a ROCE (Return on Capital Employed) of 18.3. Additionally, the stock is currently trading at a discount compared to its average historical valuations. Despite generating a return of 25.38% in the past year, the company's profits have fallen by 14.1%.

However, there are some positive factors to consider. Bemco Hydraulics has a high management efficiency, with a ROCE of 15.17%. The company also has a healthy long-term growth rate, with an annual growth rate of 46.73% in operating profit. On the technical front, the stock's trend is currently sideways, indicating no clear price momentum. The technical trend has also deteriorated from mildly bullish on November 13, 2024, and has generated a negative return of -2.44% since then.

It is worth noting that the majority shareholders of Bemco Hydraulics are the promoters themselves. This could potentially impact the company's decision-making and future growth. Overall, while the company has some positive aspects, the recent downgrade by MarketsMOJO suggests caution for potential investors.