Gagan Gases Downgraded to 'Sell' by MarketsMOJO Due to Weak Fundamentals and Expensive Valuation

Gagan Gases, a microcap company in the industrial gases and fuels industry, has recently been downgraded to a 'Sell' by MarketsMOJO on November 12, 2024. This decision was based on the company's weak long-term fundamental strength, with a 2.47% CAGR growth in operating profits over the last 5 years. Additionally, the company's ability to service its debt is also a concern, with a poor EBIT to Interest (avg) ratio of 0.16.
The stock is also considered to be expensive, with a price to book value of 3.4 and a return on equity of only 5.1. However, it is currently trading at a discount compared to its average historical valuations. Despite generating a return of 32.92% in the past year, the company's profits have fallen by -90.9%.

On a positive note, Gagan Gases reported its highest PBDIT(Q) at Rs 0.10 cr, PBT LESS OI(Q) at Rs 0.08 cr, and PAT(Q) at Rs 0.08 cr in September 2024. The stock is also technically in a mildly bullish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend.

Moreover, there has been a rise in promoter confidence as they have increased their stake in the company by 0.65% in the previous quarter and currently hold 38.43% of the company. This is a positive sign of their belief in the future of the business.

In terms of performance, Gagan Gases has not only beaten the market in the near term but also in the long term. Along with generating a return of 32.92% in the last year, the stock has outperformed BSE 500 in the last 3 years, 1 year, and 3 months. However, considering the current weak fundamentals and expensive valuation, MarketsMOJO has downgraded the stock to a 'Sell'. Investors are advised to carefully evaluate their investment decisions before investing in Gagan Gases.