CDG Petchem Receives 'Sell' Rating from MarketsMOJO

CDG Petchem, a microcap company in the plastic products industry, has recently received a 'Sell' rating from MarketsMOJO on September 29, 2023. This downgrade is due to several factors that indicate a weak long-term fundamental strength for the company.
One of the main concerns is the high debt of CDG Petchem, with a debt-to-equity ratio of 8.64 times. This indicates a heavy reliance on debt financing, which can be risky for the company's financial stability. Additionally, the company has shown poor long-term growth, with net sales decreasing by an annual rate of -0.21% and operating profit remaining stagnant at 0% over the last 5 years.

In the latest quarter, CDG Petchem's operating cash flow was at its lowest at Rs 1.04 crore, and net sales have fallen by -18.03%. These results further support the 'Sell' rating given by MarketsMOJO.

On a positive note, the stock is currently in a mildly bullish range and has shown bullish indicators such as MACD, KST, and OBV. However, with a ROCE of only 4.9, the stock is fairly valued with an enterprise value to capital employed ratio of 1.6. It is also trading at a discount compared to its historical valuations.

Majority shareholders of CDG Petchem are the promoters, which may indicate a lack of interest from other investors. However, the stock has outperformed the market (BSE 500) with a return of 128.17% in the last year, while its profits have increased by 85.6%.

In conclusion, CDG Petchem's recent downgrade to 'Sell' by MarketsMOJO is a result of its high debt, poor long-term growth, and flat results in the latest quarter. While the stock has shown some bullish indicators, it is still fairly valued and may not be a favorable investment option for now.