Hardcastle & Waud Mfg Co Downgraded to 'Sell' by MarketsMOJO: Weak Fundamentals and High Valuation Cited.

Hardcastle & Waud Mfg Co, a microcap company in the paints industry, has recently been downgraded to a 'Sell' by MarketsMOJO on November 5th, 2024. This decision was based on several factors, including weak long-term fundamental strength, poor 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 CAGR growth in operating profits over the last 5 years, which stands at only 32.28%. Additionally, the company's EBIT to Interest ratio is at a poor 0.85, indicating a weak ability to service its debt. Furthermore, the Return on Equity (ROE) for the company is only 2.85%, which is considered low and reflects a low profitability per unit of shareholders' funds.

In terms of valuation, Hardcastle & Waud Mfg Co has a very expensive valuation with a price to book value of 1.6. This is significantly higher than its average historical valuations, indicating that the stock is currently trading at a premium. While the stock has generated a high return of 148.23% in the past year, its profits have only risen by 117.2%, resulting in a low PEG ratio of 0.2.

On a positive note, the company has declared positive results for the last 4 consecutive quarters, with a significant growth in PAT (HY) at 152.24% and the highest ROCE (HY) at 6.79%. The PBDIT (Q) is also at its highest at Rs 1.12 crore. However, these positive results were not enough to outweigh the other factors leading to the 'Sell' rating.

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. However, the majority shareholders of the company are promoters, which may raise concerns for potential investors.

In comparison to the market (BSE 500) returns of 32.67%, Hardcastle & Waud Mfg Co has outperformed with a return of 148.23% in the last year. However, this may not be sustainable in the long run, and investors should carefully consider all factors before making any investment decisions.