Emami Paper Mills Downgraded to 'Sell' by MarketsMOJO Due to High Debt and Poor Growth

Emami Paper Mills, a microcap company in the paper and paper products industry, has recently been downgraded to a 'Sell' by MarketsMOJO on October 18, 2024. This decision was based on several factors, including the company's low ability to service debt with a high Debt to EBITDA ratio of 3.90 times. Additionally, the company has shown poor long-term growth with only a 5.35% annual growth rate in Net Sales and 6.88% in Operating profit over the last 5 years.
Furthermore, the company's recent financial results for June 2024 have been flat, with a significant decrease in PBT LESS OI(Q) at Rs 16.81 crore and PAT(Q) at Rs 12.80 crore. The DEBTORS TURNOVER RATIO(HY) is also at its lowest at 7.57 times. These factors, along with the stock being technically in a Mildly Bearish range, have contributed to the 'Sell' rating.

Institutional investors have also decreased their stake in the company by -1.98% over the previous quarter, indicating a lack of confidence in its performance. Emami Paper Mills has also underperformed the BSE 500 in the last 3 years, 1 year, and 3 months, with a return of -18.10%.

On the positive side, the company has a Very Attractive valuation with a ROCE of 12.9 and a 0.9 Enterprise value to Capital Employed. However, this does not outweigh the other negative factors mentioned above.

In conclusion, Emami Paper Mills is facing several challenges, including high debt, poor growth, and decreasing institutional investor participation. These factors have led to a 'Sell' rating by MarketsMOJO and underperformance in the stock market.