Danlaw Technologies India Downgraded to 'Sell' by MarketsMOJO on September 30, 2024

Danlaw Technologies India, a microcap IT software company, has recently been downgraded to a 'Sell' by MarketsMOJO on September 30, 2024. This decision was based on several factors, including poor management efficiency with a low ROCE of 3.65%. This indicates that the company is not generating enough profits per unit of total capital.
Technically, the stock is currently in a mildly bearish range, with the trend deteriorating from sideways on September 30, 2024. The key technical factor, KST, has also been bearish since the same date. Additionally, the stock is currently trading at a discount compared to its average historical valuations, with an expensive valuation of 18.8 Enterprise value to Capital Employed and a PEG ratio of 2.7.

One concerning factor is that despite its size, domestic mutual funds hold only 0% of the company. This could signify that they are not comfortable with the price or the business, as they have the capability to conduct in-depth research on companies.

However, there are some positive aspects to consider. The company has shown healthy long-term growth, with net sales growing at an annual rate of 51.50% and operating profit at 65.43%. It has also declared positive results for the last three consecutive quarters, with the highest ROCE (HY) at 16.00%, DEBTORS TURNOVER RATIO (HY) at 7.28 times, and PAT (9M) at Rs 5.32 Cr.

In the past year, Danlaw Technologies India has outperformed the market (BSE 500) with a return of 186.23%, compared to the market's return of 39.48%. However, with the recent downgrade and other concerning factors, it may be wise for investors to approach this stock with caution.