Jet Freight Logistics Receives 'Sell' Rating Due to Weak Fundamentals and High Debt

Jet Freight Logistics, a microcap logistics company, has recently received a 'Sell' rating from MarketsMOJO. This downgrade is based on the company's weak long-term fundamental strength, with a -12.54% CAGR growth in operating profits over the last 5 years. Additionally, the company has a high debt to EBITDA ratio of 5.31 times, indicating a low ability to service debt. Furthermore, the company has a low return on equity of 5.61%, which signifies low profitability per unit of shareholders' funds.
One concerning factor for investors is that 26.16% of the promoter shares are pledged. In a falling market, this can put additional downward pressure on the stock prices. However, the company has declared positive results for the last 3 consecutive quarters, with the highest operating cash flow of Rs 15.01 crore and a higher profit after tax of Rs 1.65 crore in the last half-year. The return on capital employed is also at its highest at 10.88%.

On a technical front, the stock's trend is sideways, indicating no clear price momentum. The technical trend has deteriorated from mildly bullish on 26-Nov-24 and has generated only 0.07% returns since then. However, with a ROCE of 10.2, the stock has a very attractive valuation with a 1.1 enterprise value to capital employed. It is also trading at a discount compared to its average historical valuations. In the past year, while the stock has generated a return of 23.10%, its profits have risen by 204.1%, resulting in a PEG ratio of 0.1.

Investors should carefully consider these factors before making any investment decisions regarding Jet Freight Logistics. While the company has shown positive results in recent quarters, its long-term fundamental strength and high promoter pledged shares may pose a risk to its stock performance.