International Conveyors Downgraded to 'Sell' by MarketsMOJO Due to High Debt and Low Profitability

International Conveyors, a microcap engineering company, has recently been downgraded to a 'Sell' by MarketsMOJO on September 30, 2024. This decision was based on several factors, including the company's high debt to EBITDA ratio of 3.06 times, indicating a low ability to service debt. Additionally, the company's return on equity (avg) of 9.21% suggests a low profitability per unit of shareholders' funds.
In the first half of 2024, the company's net sales have decreased by 27.48%, with interest expenses at their highest at Rs 2.75 crore. Non-operating income accounts for 94.47% of the company's profit before tax, indicating a reliance on non-operating activities for profitability.

Despite a return on equity of 22.9, the stock is currently trading at a discount compared to its average historical valuations. However, over the past year, the stock has generated a return of 21.57%, with profits rising by 123.6%. The PEG ratio of the company is 0.1, indicating a potential undervaluation.

It is worth noting that despite its size, domestic mutual funds hold only 0% of the company, which could signify a lack of comfort with the stock's price or the business itself. Additionally, the stock has underperformed the market in the last year, with a return of 21.57% compared to the market's return of 39.48%.

On a positive note, the company has shown healthy long-term growth, with operating profit growing at an annual rate of 76.65%. However, the technical trend for the stock is currently sideways, indicating no clear price momentum. The trend has also deteriorated from mildly bullish on September 30, 2024, generating a -4.2% return since then.

In conclusion, while International Conveyors may have potential for long-term growth, the current financial and market trends suggest a 'Sell' rating for the stock. Investors should carefully consider these factors before making any investment decisions.