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

Jubilant Industries, a smallcap company in the pesticides and agrochemicals industry, has recently been downgraded to a 'Sell' by MarketsMOJO on September 23, 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. This has resulted in a low profitability per unit of total capital, with a return on capital employed of only 9.75%. Additionally, the company's expensive valuation, with an enterprise value to capital employed ratio of 7.2, further supports the 'Sell' call.

Despite the stock's impressive return of 157.55% in the past year, its profits have only increased by 29.7%. This has resulted in a PEG ratio of 1.3, indicating that the stock may be overvalued. It is also worth noting that domestic mutual funds hold a mere 0% stake in the company, which could suggest that they are not comfortable with the current price or the business itself.

On a positive note, Jubilant Industries has shown strong results in the June 2024 quarter, with the highest operating profit to interest ratio of 10.31 times and the lowest debt to equity ratio of 0.69 times. The company also recorded the highest net sales of Rs 358.14 crore in the same quarter.

Technically, the stock is currently in a mildly bullish range, with multiple factors such as MACD, KST, and DOW indicating a bullish trend. Additionally, Jubilant Industries has consistently outperformed the BSE 500 index in the last three annual periods, making it a consistent performer.

In conclusion, while Jubilant Industries may have some positive factors, the high debt and weak fundamental strength make it a risky investment. Investors should carefully consider these factors before making any decisions regarding this smallcap company in the pesticides and agrochemicals industry.