Indo-City Infotech Downgraded to 'Sell' by MarketsMOJO Due to Weak Financial Performance

Indo-City Infotech, a microcap IT software company, has recently been downgraded to a 'Sell' by MarketsMOJO on September 17, 2024. This decision was based on the company's weak long-term fundamental strength, as it has been operating at a loss. Additionally, the company's ability to service its debt is also a concern, with a poor EBIT to Interest ratio of -0.62.
In the latest quarter, Indo-City Infotech reported a decline in net sales by -47.96%, with PBDIT and PBT LESS OI also at their lowest levels. These factors contribute to the company's negative return on capital employed.

On the technical side, the stock is currently in a mildly bullish range, with multiple indicators such as MACD, KST, DOW, and OBV showing a bullish trend. However, the company's ROE of 6.9 and attractive valuation with a price to book value of 1.3 may not be enough to offset its weak financial performance.

Despite generating a return of 107.59% in the past year, Indo-City Infotech's profits have only increased by 80%, resulting in a PEG ratio of 0. This suggests that the stock may be overvalued compared to its earnings growth.

On a positive note, the company has consistently outperformed the BSE 500 index in the last three annual periods, indicating its potential for growth. However, with the current financial challenges, it may be wise for investors to approach this stock with caution.