DMCC Speciality Chemicals Downgraded to 'Sell' by MarketsMOJO on Poor Growth and Valuation

DMCC Speciality Chemicals, a microcap company in the chemicals industry, has recently been downgraded to a 'Sell' by MarketsMOJO on July 2, 2024. This decision was based on the company's poor long-term growth, as its operating profit has declined by an annual rate of 24.03% over the last 5 years.
In addition, the company's recent financial results for March 2024 have been flat, with a decrease in net sales by 12.99% and a low operating profit to interest ratio of 1.92 times. The PBT less OI (profit before tax less other income) has also been at its lowest at Rs -0.78 crore.

Furthermore, DMCC Speciality Chemicals has a high ROCE (return on capital employed) of 7.1, making its valuation expensive with an enterprise value to capital employed ratio of 3.1. However, the stock is currently trading at a discount compared to its average historical valuations.

Despite its small size, domestic mutual funds hold only 0.02% of the company, indicating their lack of confidence in the company's current price or business. Additionally, the stock has underperformed the market in the last year, with a return of only 0.35% compared to the BSE 500 index's return of 37.36%.

On a positive note, DMCC Speciality Chemicals has a strong ability to service debt, with a low debt to EBITDA ratio of 1.05 times. However, the technical trend for the stock is currently sideways, indicating no clear price momentum. The trend has also deteriorated from mildly bullish on July 2, 2024, resulting in a -2.13% return since then.

In conclusion, based on the recent downgrade and various factors such as poor long-term growth, expensive valuation, and underperformance in the market, it may be wise for investors to consider selling their stocks in DMCC Speciality Chemicals.