Karma Energy Receives 'Sell' Rating from MarketsMOJO Due to Weak Financials

Karma Energy, a microcap company in the power industry, has recently received a 'Sell' rating from MarketsMOJO on May 30, 2024. This downgrade is based on several factors that indicate weak long-term fundamental strength for the company.
One of the main reasons for the 'Sell' rating is the company's consistent operating losses. Over the last 5 years, Karma Energy has reported a negative annual growth rate of -15.75% in net sales and -188.35% in operating profit. Additionally, the company has a high debt to equity ratio of 3.26 times, which could potentially hinder its future growth.

Furthermore, the company has reported negative returns on equity due to its losses. In the most recent quarter, Karma Energy's ROCE (HY) was at its lowest at 0.25%, while PBDIT (Q) and PBT LESS OI (Q) were also at their lowest at Rs -2.47 crore and Rs -3.20 crore, respectively.

The stock is also considered risky due to its negative operating profits and trading at a higher valuation compared to its historical average. Despite generating a return of 119.82% in the past year, the company's profits have decreased by -95.5%.

On a positive note, Karma Energy's stock is currently in a mildly bullish range and has shown bullish indicators such as MACD, Bollinger Band, KST, and OBV. Additionally, the majority of the company's shareholders are promoters, which could potentially indicate their confidence in the company's future.

Moreover, Karma Energy has consistently outperformed BSE 500 in the last 3 annual periods, with a return of 119.82% in the past year. However, considering the current state of the company's financials, MarketsMOJO has downgraded the stock to 'Sell' and advises investors to proceed with caution.