Kothari Fermentation & Biochem Downgraded to 'Sell' by MarketsMOJO on Weak Fundamentals

Kothari Fermentation & Biochem, a microcap FMCG company, has recently been downgraded to a 'Sell' by MarketsMOJO on November 7, 2024. This decision was based on the company's weak long-term fundamental strength, with a -19.22% CAGR growth in operating profits over the last 5 years.
In addition, the stock has underperformed the market in the last year, generating a return of only 13.85% compared to the market's 31.95% return. However, there have been some positive developments for the company, such as higher PAT (9M) at Rs 2.35 Cr and the highest EPS (Q) at Rs 0.73 in June 2024.

Technically, the stock is currently in a mildly bullish range, with both the MACD and KST technical factors showing a bullish trend. Furthermore, with a ROCE of 9.4, the stock is fairly valued with a 1.9 enterprise value to capital employed.

Despite these positive factors, the stock is currently trading at a discount compared to its average historical valuations. In the past year, while the stock has generated a return of 13.85%, its profits have risen by 59.4%.

It is worth noting that the majority shareholders of Kothari Fermentation & Biochem are the promoters themselves. This could potentially indicate a lack of interest from external investors.

In conclusion, while there have been some positive developments for Kothari Fermentation & Biochem, the company's weak long-term fundamental strength and underperformance in the market may be cause for concern. Investors should carefully consider these factors before making any investment decisions.