Indoco Remedies downgraded to 'Sell' by MarketsMOJO due to negative financial performance

Indoco Remedies, a smallcap pharmaceutical company, has recently been downgraded to a 'Sell' by MarketsMOJO on October 24, 2024. This decision was based on the company's negative financial performance in the last quarter, with a decline in net sales by -5.03%. In fact, the company has been consistently reporting negative results for the past 8 quarters.
One of the key reasons for this downgrade is the company's low operating profit to interest ratio, which stands at 2.26 times. Additionally, the operating cash flow and PBDIT have also been at their lowest levels in the last quarter, at Rs 156.70 Cr and Rs 40.25 Cr respectively.

From a technical standpoint, the stock is currently in a mildly bearish range and has been generating negative returns since October 1, 2024. The Bollinger Band and KST technical factors also indicate a bearish trend for the stock.

Furthermore, Indoco Remedies has consistently underperformed against the benchmark in the last 3 years, with a return of -1.24% in the last year alone. However, the company does have a strong ability to service debt, with a low debt to EBITDA ratio of 1.40 times.

On a positive note, the company has shown healthy long-term growth, with an annual growth rate of 52.66% in operating profit. It also has an attractive valuation, with a ROCE of 8.7 and an enterprise value to capital employed ratio of 2.1.

It is worth noting that the majority shareholders of Indoco Remedies are the promoters themselves. While the stock may be trading at a discount compared to its historical valuations, its profits have also seen a significant decline of -46% in the past year. Based on these factors, MarketsMOJO has downgraded the stock to 'Sell'.