Lehar Footwears Receives 'Sell' Rating from MarketsMOJO, Weak Long-Term Fundamentals Indicate Caution for Investors

Lehar Footwears, a microcap company in the leather industry, has recently received a 'Sell' rating from MarketsMOJO on September 16, 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 average Return on Capital Employed (ROCE) of 5.88%, which is considered weak. Additionally, the company has shown poor long-term growth with an annual operating profit growth rate of only 10.16% over the last 5 years. This is further compounded by the fact that Lehar Footwears has a high Debt to EBITDA ratio of 4.32 times, indicating a low ability to service debt.

Furthermore, the stock is currently trading at an expensive valuation with an Enterprise value to Capital Employed ratio of 2.8. Although it is trading at a fair value compared to its historical valuations, its profits have fallen by -6.7% in the past year, despite generating a return of 41.72%.

On the positive side, the company has shown growth in its net sales, which have increased by 30.2% to Rs 63.20 crore. Its PBDIT (Profit Before Depreciation, Interest, and Taxes) and PBT (Profit Before Tax) have also shown improvement, with the highest values of Rs 5.88 crore and Rs 3.06 crore respectively.

From a technical standpoint, the stock is currently in a mildly bullish range and has shown multiple bullish indicators such as MACD, KST, and DOW. However, the majority shareholders of Lehar Footwears are the promoters, which may raise concerns for potential investors.

Despite generating consistent returns over the last 3 years and outperforming BSE 500, the recent downgrade by MarketsMOJO suggests caution for investors considering Lehar Footwears. With a 'Sell' rating and weak long-term fundamentals, it may be wise to closely monitor the company's performance before making any investment decisions.