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 February 21, 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.
The company also reported negative results in December 2023, with interest expenses growing by 38.46% and the lowest operating profit to interest ratio of 1.67 times. Net sales were also at their lowest at Rs 22.55 crore. With a ROE of 13.4, the stock is currently trading at an expensive valuation with a price to book value of 2.7. However, it is still at a discount compared to its average historical valuations.

Moreover, the company's promoters have decreased their stake by -1.47% in the previous quarter, currently holding 69.18% of the company. This decrease in stake may signify reduced confidence in the future of the business.

On the positive side, the company has shown healthy long-term growth with an annual rate of 76.65% in operating profit. The stock is also technically in a mildly bullish range, with the technical trend improving since January 29, 2024, and generating -5.28% returns since then. Multiple factors, such as MACD, Bollinger Band, KST, DOW, and OBV, are also bullish for the stock.

In the past year, International Conveyors has outperformed the market (BSE 500) with a return of 64.65%, compared to the market's return of 34.12%. However, it is important to note that the company's profits have only risen by 171.9%, resulting in a low PEG ratio of 0.1. Overall, while the stock has shown market-beating performance, it is currently facing some challenges that have led to its downgrade to a 'Sell' by MarketsMOJO.