Khaitan (India) Downgraded to 'Sell' by MarketsMOJO Due to Weak Long-Term Fundamentals

Khaitan (India), a microcap company in the sugar industry, has recently been downgraded to a 'Sell' by MarketsMOJO on July 24, 2024. This decision was based on several factors that indicate a weak long-term fundamental strength for the company.
One of the main reasons for the downgrade is the company's poor performance in terms of operating profits, with a negative CAGR growth of -198.35% over the last 5 years. Additionally, Khaitan (India) has a high debt to EBITDA ratio of 7.02 times, which indicates a low ability to service debt.

Moreover, the company's return on equity (avg) is only 1.07%, which suggests a low profitability per unit of shareholders' funds. This is further supported by the fact that the company has a negative ROCE of -8.8 and an expensive valuation with a 1.6 enterprise value to capital employed.

On a positive note, Khaitan (India) has shown strong results in the last quarter, with its net sales, PBT less OI, and PAT all reaching their highest levels. However, this has not been reflected in the stock's performance, as it is currently trading at a discount compared to its average historical valuations.

In terms of technical factors, the stock is currently in a mildly bullish range, with both its MACD and KST indicators showing a bullish trend. However, it is important to note that 32.85% of the company's promoter shares are pledged, which could put additional downward pressure on the stock prices in falling markets.

Despite the recent market-beating performance of 52.91%, which is higher than the market returns of 35.30%, MarketsMOJO has still downgraded Khaitan (India) to a 'Sell' due to its weak long-term fundamentals. Investors should carefully consider these factors before making any investment decisions.