Cressanda Railway Solutions Downgraded to 'Sell' by MarketsMOJO: Poor Performance and Risks for Investors

Cressanda Railway Solutions, a microcap IT software company, has recently been downgraded to a 'Sell' by MarketsMOJO on September 17, 2024. This decision was based on several factors that indicate a poor performance and potential risks for investors.
One of the main reasons for the downgrade is the company's poor management efficiency, with a low Return on Capital Employed (ROCE) of 0.85%. This signifies a low profitability per unit of total capital, including equity and debt. Additionally, the company has a high Debt to EBITDA ratio of 11.90 times, indicating a low ability to service debt.

Furthermore, Cressanda Railway Solutions has shown poor long-term growth, with an annual growth rate of only 18.33% in operating profit over the last 5 years. This is also reflected in the company's low Return on Equity (ROE) of 4.66%, indicating a low profitability per unit of shareholders' funds.

From a technical standpoint, the stock is currently in a Mildly Bearish range, with the MACD (Moving Average Convergence Divergence) indicator being Bearish since July 29, 2024. Additionally, the stock is trading at an expensive valuation, with a 3.9 Enterprise value to Capital Employed ratio.

Despite the company's small size, domestic mutual funds hold only 0% of the company, which could suggest that they are not comfortable with the price or the business. Moreover, Cressanda Railway Solutions has underperformed the market (BSE 500) in the last year, generating negative returns of -46.15% compared to the market's 34.98% returns.

On a positive note, the company has declared very positive results in June 2024, with a growth in net profit of 1583.33%. This trend has continued for the last 3 consecutive quarters, with PBT LESS OI(Q) growing at 168.12%, PAT(Q) growing at 280.4%, and NET SALES(Q) growing at 23.71%.

In conclusion, based on the recent downgrade and various factors indicating poor performance and risks, it may be wise for investors to consider selling their stocks in Cressanda Railway Solutions.