Dynamatic Technologies Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals and High Debt

Dynamatic Technologies, a midcap company in the defence industry, has recently been downgraded to a 'Sell' by MarketsMOJO on 2024-05-02. This decision was based on several factors, including weak long-term fundamental strength, low ability to service debt, and low profitability per unit of shareholders' funds.
One of the main reasons for the downgrade is the company's weak net sales growth, with a CAGR of -0.83% over the last 5 years. Additionally, Dynamatic Technologies has a high debt to EBITDA ratio of 3.64 times, indicating a low ability to service its debt. The company's return on equity (avg) is also low at 6.17%, further highlighting its low profitability.

Furthermore, the stock is currently trading at a discount compared to its average historical valuations, with an expensive valuation of 5.2 enterprise value to capital employed. However, it has generated a return of 173.83% in the past year, with profits rising by 65.1%. The PEG ratio of the company is 1.5, indicating a slightly overvalued stock.

On a positive note, Dynamatic Technologies has declared positive results for the last 4 consecutive quarters, with its ROCE (HY) at its highest at 11.26%. The company's PAT (9M) is also higher at Rs 48.88 Cr, and its debt-equity ratio (HY) is at its lowest at 1.09 times.

From a technical standpoint, the stock is currently in a mildly bullish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend. Additionally, the company has a high institutional holding of 27.92%, indicating that these investors have better resources to analyze the company's fundamentals.

Despite the recent downgrade, Dynamatic Technologies has consistently generated returns over the last 3 years, outperforming BSE 500 in each of the last 3 annual periods. However, it is important to note that this news article is based on fact-based information and does not include any external data or sources. As always, it is recommended to do your own research and analysis before making any investment decisions.