Binayaka Tex Processors Receives 'Sell' Rating from MarketsMOJO Due to Weak Fundamentals and High Debt

Binayaka Tex Processors, a microcap company in the textile industry, has recently received a 'Sell' rating from MarketsMOJO on July 1, 2024. This downgrade is due to weak long-term fundamental strength, with an average Return on Capital Employed (ROCE) of 5.54%. Additionally, the company has shown poor long-term growth, with a net sales growth rate of only 3.51% over the last 5 years. Furthermore, the company has a high Debt to EBITDA ratio of 11.65 times, indicating a low ability to service debt.
Despite declaring positive results in March 2024 after 4 consecutive negative quarters, Binayaka Tex Processors still faces challenges. Its PBDIT(Q) is at its highest at Rs 6.53 crore, and its OPERATING PROFIT TO NET SALES(Q) is also at its highest at 11.69%. However, its PBT LESS OI(Q) is at its highest at Rs 4.06 crore.

Technically, the stock is in a mildly bullish range, with its MACD and KST technical factors also showing a bullish trend. With an ROCE of 8, the stock has a fair valuation with a 1.4 Enterprise value to Capital Employed. It is currently trading at a discount compared to its average historical valuations. However, despite generating a return of 153.98% in the past year, the company's profits have only risen by 5.3%, resulting in a high PEG ratio of 5.2.

The majority shareholders of Binayaka Tex Processors are the promoters, and the company has consistently generated returns over the last 3 years. In fact, it has outperformed BSE 500 in each of the last 3 annual periods. While the stock has shown strong performance in the past year, investors should carefully consider the company's long-term growth potential and debt management before making any investment decisions.