Dhanlaxmi Cotex downgraded to 'Sell' by MarketsMOJO due to weak fundamentals and underperformance

Dhanlaxmi Cotex, a microcap company in the finance/NBFC industry, has recently been downgraded to a 'Sell' by MarketsMOJO on August 23, 2024. This decision was based on the company's weak long-term fundamental strength, with an average Return on Equity (ROE) of 5.93% and poor long-term growth as its operating profit has declined by an annual rate of -3.70%.
In addition, the company's recent financial results for June 2024 have been flat, with a decrease in net sales by -26.23% and a low cash and cash equivalents of Rs. 0.68 crore. This has also contributed to the stock's underperformance in the market, as it has generated negative returns of -12.26% compared to the market's 37.48% returns in the last year.

However, there are some positive technical indicators for the stock, as it is currently in a bullish range and has generated 9.53% returns since August 21, 2024. Multiple factors such as MACD, Bollinger Band, KST, and OBV are also bullish for the stock.

With a ROE of 3.9, the stock is currently fairly valued with a price to book value of 0.6. However, it is trading at a premium compared to its average historical valuations. Despite the negative returns in the past year, the company's profits have increased by 149.6%, resulting in a low PEG ratio of 0.1.

It is worth noting that the majority shareholders of Dhanlaxmi Cotex are the promoters themselves. This may indicate their confidence in the company's future prospects. However, based on the current information and analysis, MarketsMOJO has downgraded the stock to a 'Sell' and advises investors to exercise caution before making any investment decisions.