Lambodhara Textiles Downgraded to 'Sell' by MarketsMOJO Due to Poor Growth and Bearish Trend

Lambodhara Textiles, a microcap company in the textile industry, has recently been downgraded to a 'Sell' by MarketsMOJO on October 7, 2024. This decision was based on several factors, including poor long-term growth, flat results in June 2024, and a technically bearish trend.
Over the last five years, Lambodhara Textiles has only seen a 2.29% annual growth in net sales and an 11.23% growth in operating profit. In addition, their profits have fallen by -44.04% in the last nine months and their return on capital employed (ROCE) is at a low of 6.62%. Furthermore, their non-operating income is a significant 47.96% of their profit before tax, which can be a cause for concern.

From a technical standpoint, the stock has been in a mildly bearish range since October 7, 2024, with a -9.06% return since then. The Bollinger Band, a key technical factor, has also been bearish since the same date.

Another factor to consider is that 39.28% of the company's promoter shares are pledged. In a falling market, this can put additional downward pressure on the stock prices.

While Lambodhara Textiles has shown high management efficiency with a ROCE of 16.08%, they also have a low debt to EBITDA ratio of 1.14 times, indicating a strong ability to service debt. Additionally, with a ROCE of 4.6, the stock is currently trading at an attractive valuation with a 1.4 enterprise value to capital employed. However, it is worth noting that the stock is currently trading at a discount compared to its average historical valuations.

In the last year, while the overall market (BSE 500) has generated a return of 33.39%, Lambodhara Textiles has significantly underperformed with a negative return of -14.03%. This is also reflected in their profits, which have fallen by -64.8% in the same period.

Overall, considering the various factors, MarketsMOJO has downgraded Lambodhara Textiles to a 'Sell'. Investors should carefully evaluate the company's performance and future prospects before making any investment decisions.