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 September 25, 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 -1.04%. Additionally, the company's EBIT to Interest ratio is only 0.85, indicating a weak ability to service its debt. Furthermore, the company's Return on Equity (avg) is at a low 1.75%, showing low profitability.

In terms of valuation, the stock is considered very expensive with a price to book value of 1.6. However, it is currently trading at a fair value compared to its historical valuations. While the stock has generated a high return of 131.99% 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 its ROCE (HY) at the highest level of 6.79%. It also has the highest PBDIT (Q) at Rs 1.12 crore and PBT LESS OI (Q) at Rs 0.96 crore.

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.

The majority shareholders of Hardcastle & Waud Mfg Co are the promoters, and the company has consistently generated returns over the last 3 years. In fact, it has outperformed BSE 500 in each of the last 3 annual periods, showcasing its potential for growth.

In conclusion, while Hardcastle & Waud Mfg Co may have some weaknesses in its financials, it also has some positive aspects that investors should consider. It is important to carefully analyze all factors before making any investment decisions.