CHD Chemicals Receives 'Sell' Rating Due to Weak Fundamentals and High Debt Levels

CHD Chemicals, a microcap trading company, has recently received a 'Sell' rating from MarketsMOJO. This downgrade is based on the company's weak long-term fundamental strength, with a -17.20% CAGR growth in operating profits over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 7.29 times, indicating a low ability to service debt. Furthermore, the company's return on equity (avg) of 2.40% reflects low profitability per unit of shareholders' funds.
In terms of recent performance, CHD Chemicals saw flat results in December 2023, with net sales of Rs 8.49 crore, a decrease of -21.46% compared to the previous year. However, the stock is currently in a mildly bullish range, with its RSI and Bollinger Band technical factors also showing a bullish trend.

From a valuation perspective, CHD Chemicals has a very attractive ROCE of 1.9 and a low enterprise value to capital employed ratio of 0.7. The stock is also trading at a discount compared to its average historical valuations. Despite a 30.93% return over the past year, the company's profits have only risen by 49%, resulting in a PEG ratio of 0.

It is worth noting that the majority of CHD Chemicals' shareholders are non-institutional investors. This could potentially lead to higher volatility in the stock price.

In conclusion, while CHD Chemicals may have some positive technical indicators, its weak fundamental strength and high debt levels make it a risky investment. Investors should carefully consider these factors before making any decisions regarding this microcap trading company.