Interglobe Aviation Receives 'Sell' Rating Amidst High Debt and Decreasing Promoter Confidence

Interglobe Aviation, the parent company of India's largest airline IndiGo, has recently received a 'Sell' rating from MarketsMOJO. This downgrade is based on several factors that indicate a weak long-term fundamental strength for the company.
One of the main reasons for the 'Sell' rating is the high debt of Interglobe Aviation, with a debt-equity ratio of 9.51 times. This indicates a low ability to service debt and can be a cause for concern for investors. Additionally, the company has also shown poor long-term growth, with operating profit declining by an annual rate of 213.70% over the last 5 years.

Moreover, the promoters of the company have decreased their stake by 2% in the previous quarter, which could suggest a lack of confidence in the future of the business. On the positive side, Interglobe Aviation has declared positive results for the last 7 consecutive quarters, with a high ROCE (return on capital employed) of 22.93% and a high inventory turnover ratio of 110.28 times.

Technically, the stock is currently in a mildly bullish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend. However, with a ROCE of 47.1, the stock is fairly valued with an enterprise value to capital employed ratio of 9.9. It is also trading at a discount compared to its average historical valuations.

In terms of performance, Interglobe Aviation has outperformed the BSE 500 index in the last 3 years, 1 year, and 3 months, generating a return of 105.78%. However, while the stock has seen a significant increase in profits, the PEG ratio of the company is 0.2, indicating a potential overvaluation.

In conclusion, while Interglobe Aviation has shown market-beating performance in the long term, the recent downgrade to 'Sell' by MarketsMOJO highlights some concerning factors such as high debt and decreasing promoter confidence. Investors should carefully consider these factors before making any investment decisions.