Igarashi Motors India Downgraded to 'Sell' by MarketsMOJO Due to Poor Long-Term Growth and Expensive Valuation

Igarashi Motors India, a smallcap company in the auto ancillary industry, has recently been downgraded to a 'Sell' by MarketsMOJO on May 13, 2024. This decision was based on the company's poor long-term growth, with an annual operating profit growth rate of -27.01% over the last 5 years.
In addition, the company's recent financial results for December 2023 showed flat performance, with a high debt-to-equity ratio of 0.28 times and low cash and cash equivalents of Rs 5.09 crore. This has led to an expensive valuation for the company, with an enterprise value to capital employed ratio of 3.1.

Despite the stock trading at a discount compared to its historical valuations, it has still generated a return of 23.65% over the past year. However, this growth is not reflected in the company's profits, which have only risen by 313.1%. This has resulted in a low PEG ratio of 0.4 for the company.

On the positive side, Igarashi Motors India has a strong ability to service debt, with a low debt to EBITDA ratio of 1.10 times. However, the technical trend for the stock is currently sideways, indicating no clear price momentum. The trend has also deteriorated from mildly bullish on May 13, 2024, and has only generated a return of 1.95% since then.

It is worth noting that the majority shareholders of Igarashi Motors India are promoters, which may indicate a strong belief in the company's potential. However, based on the current data and analysis, MarketsMOJO has downgraded the stock to a 'Sell' and recommends caution for potential investors.