East West Holdings Receives 'Sell' Rating from MarketsMOJO Due to Weak Fundamentals

East West Holdings, a microcap company in the miscellaneous industry, has recently received a 'Sell' rating from MarketsMOJO on June 24, 2024. This downgrade is based on several factors that indicate a weak long-term fundamental strength for the company.
One of the main reasons for the 'Sell' rating is the company's average Return on Capital Employed (ROCE) of 6.85%, which is considered low. Additionally, East West Holdings has a high Debt to EBITDA ratio of 6.04 times, indicating a low ability to service debt.

From a technical standpoint, the stock is currently in a Mildly Bearish range and has been generating negative returns since June 21, 2024. The RSI and Bollinger Band technical factors also suggest a bearish trend for the stock.

Institutional investors have also decreased their stake in the company by -3.63% over the previous quarter, holding only 0.06% of the company. This decrease in participation by institutional investors could be a cause for concern for retail investors.

East West Holdings has also underperformed the market in the last year, generating a return of 23.47% compared to the market's (BSE 500) return of 38.50%.

While the company did declare positive results in March 2024 after flat results in December 2023, its ROCE (HY) was at its highest at 15.66%, PBDIT (Q) at Rs 3.56 crore, and PAT (Q) at Rs 6.04 crore. However, with a ROCE of 9.1, the company's valuation is considered attractive with a 1.1 Enterprise value to Capital Employed.

Despite the positive results, the stock is currently trading at a discount compared to its average historical valuations. Additionally, while the stock has generated a return of 23.47% in the last year, its profits have risen by 604.8%, resulting in a PEG ratio of 0. This could be a red flag for investors.

In conclusion, East West Holdings' recent 'Sell' rating from MarketsMOJO is based on various factors such as weak long-term fundamentals, technical indicators, and underperformance in the market. Investors should carefully consider these factors before making any investment decisions.