Garment Mantra Lifestyle Receives 'Sell' Rating from MarketsMOJO, Weak Fundamentals and High Debt Raise Concerns

Garment Mantra Lifestyle, a microcap company in the textile industry, has recently received a 'Sell' rating from MarketsMOJO on September 9, 2024. This downgrade is based on the company's weak long-term fundamental strength, with a -16.15% CAGR growth in operating profits over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 5.47 times, indicating a low ability to service debt. Furthermore, the company has only been able to generate a return on equity of 9.13%, which signifies low profitability per unit of shareholders' funds.
In the latest quarter, the company's results have been flat, with interest growing at 38.25% and the debt-equity ratio reaching its highest at 2.10 times. However, there are some positive technical factors to note, as the stock is currently in a mildly bullish range and both the MACD and KST technical indicators are bullish.

With a ROCE of 9.3, Garment Mantra Lifestyle is currently trading at an attractive valuation with a 1.4 enterprise value to capital employed. The stock is also trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 36.36%, while its profits have risen by 185%. The PEG ratio of the company is 0.1, indicating that it is undervalued.

It is worth noting that the majority of shareholders in Garment Mantra Lifestyle are non-institutional investors. Overall, while the company may have some positive technical factors, its weak fundamental strength and high debt levels make it a risky investment. Investors should carefully consider these factors before making any decisions regarding this microcap textile company.