Hilton Metal Forging Downgraded to 'Sell' Rating

Hilton Metal Forging, a microcap company in the castings/forgings industry, has recently been downgraded to a 'Sell' by MarketsMOJO on December 11, 2023. This decision was based on weak long-term fundamental strength, with an average Return on Capital Employed (ROCE) of 3.68%, and poor long-term growth, with net sales only growing at an annual rate of 3.87% over the last 5 years. Additionally, the company has a high Debt to EBITDA ratio of 7.39 times, indicating a low ability to service debt.
However, there have been some positive developments for Hilton Metal Forging in September 2023. The company's Profit After Tax (PAT) has grown by 90.09% and its Operating Profit to Interest ratio is at its highest at 3.34 times. Net sales have also reached a high of Rs 34.81 crore.

From a technical standpoint, the stock's trend is currently sideways, indicating no clear price momentum. However, it has improved from a mildly bearish trend on December 8, 2023, and has generated a return of -1.89% since then.

In terms of valuation, Hilton Metal Forging has an attractive ROCE of 8.6 and a 2.5 Enterprise value to Capital Employed. The stock is currently trading at a discount compared to its average historical valuations. While it has generated a return of 109.31% in the past year, its profits have only risen by 0.9%.

The majority of shareholders in Hilton Metal Forging are non-institutional investors. However, the company has consistently generated returns over the last 3 years, outperforming the BSE 500 index in each of the last 3 annual periods.

Overall, while there have been some positive developments for Hilton Metal Forging, the company's weak long-term fundamentals and high debt ratio have led to a 'Sell' rating from MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.