Jubilant Industries Downgraded to 'Sell' by MarketsMOJO Due to High Debt and Weak Fundamentals

Jubilant Industries, a smallcap company in the pesticides and agrochem industry, has recently been downgraded to a 'Sell' by MarketsMOJO on September 2, 2024. This decision was based on the company's high debt and weak long-term fundamental strength.
With a debt to equity ratio of 4.36 times, Jubilant Industries is considered a high debt company. Additionally, its return on capital employed (ROCE) is only 9.75%, indicating low profitability per unit of total capital. The company also has an expensive valuation with an enterprise value to capital employed ratio of 7.2.

Despite the stock's 144.32% return in the past year, its profits have only increased by 29.7%, resulting in a PEG ratio of 1.2. This suggests that the stock may be overvalued. It is also worth noting that domestic mutual funds hold only 0% of the company, which could indicate a lack of confidence in the company's performance.

On the positive side, Jubilant Industries has shown strong results in June 2024, with the highest operating profit to interest ratio and the lowest debt to equity ratio. Its net sales have also increased to Rs 358.14 crore. Technically, the stock is in a mildly bullish range, with multiple factors such as MACD, KST, and DOW indicating a bullish trend.

However, despite its market-beating performance in the long term, Jubilant Industries has underperformed the BSE 500 index in the last 3 years, 1 year, and 3 months. This, combined with the company's high debt and low profitability, has led MarketsMOJO to downgrade the stock to a 'Sell'. Investors should carefully consider these factors before making any decisions regarding Jubilant Industries.