Jagran Prakashan downgraded to 'Sell' due to poor long-term growth and high promoter share pledging

Jagran Prakashan, a smallcap company in the printing and publishing industry, has recently been downgraded to a 'Sell' by MarketsMOJO on February 7, 2024. This decision was based on the company's poor long-term growth, with net sales and operating profit declining at an annual rate of -4.17% and -19.93% respectively over the last 5 years.
In addition, the company has declared negative results for the past 4 consecutive quarters, with its lowest operating cash flow at Rs 271.50 crore and a decrease of -20.94% in PBT less OI (quarterly). The company's ROCE (return on capital employed) is also at its lowest at 11.41%.

One of the major concerns for investors is that 99.97% of the promoter shares are pledged, which can put additional downward pressure on the stock prices in falling markets.

On the positive side, the company has a low debt to equity ratio and its stock is currently in a mildly bullish range. Technical indicators such as MACD, Bollinger Band, and KST are also showing bullish signals.

However, with a ROE (return on equity) of 8.9, the stock is currently fairly valued with a price to book value of 1.2. It is also trading at a premium compared to its average historical valuations. In the past year, while the stock has generated a return of 45.57%, its profits have fallen by -35%.

Despite these challenges, Jagran Prakashan has consistently delivered returns over the last 3 years and has outperformed BSE 500 in each of the last 3 annual periods. Investors should carefully consider these factors before making any investment decisions regarding this smallcap company in the printing and publishing industry.