Lesha Industries downgraded to 'Sell' by MarketsMOJO due to weak fundamentals and high valuation.

Lesha Industries, a microcap company in the iron and steel industry, has recently been downgraded to a 'Sell' by MarketsMOJO on August 13, 2024. This decision was based on several factors, including the company's weak long-term fundamental strength, poor ability to service its debt, and low profitability per unit of shareholders' funds.
One of the main reasons for the downgrade is the company's weak CAGR growth in net sales over the last 5 years, which stands at 49.12%. Additionally, Lesha Industries has a poor EBIT to Interest (avg) ratio of 0.10, indicating its inability to service its debt effectively. The company's Return on Equity (avg) is also low at 1.05%, further highlighting its low profitability.

Furthermore, Lesha Industries has a very expensive valuation with a 2.5 Enterprise value to Capital Employed and is currently trading at a discount compared to its average historical valuations. Despite a 118% increase in profits over the past year, the stock has generated negative returns of -4.86%, resulting in a PEG ratio of 0.2.

In the last year, Lesha Industries has underperformed the market (BSE 500) by generating negative returns of -4.86%, while the market has generated returns of 34.08%. This underperformance is a cause for concern for investors.

On a positive note, the company has declared positive results for the last 3 consecutive quarters, with a higher PAT (HY) of Rs 0.68 crore. Technically, the stock is in a mildly bullish range, with its MACD and KST technical factors also showing a bullish trend.

It is worth noting that the majority of Lesha Industries' shareholders are non-institutional investors. This could potentially lead to higher volatility in the stock price.

In conclusion, based on the recent downgrade by MarketsMOJO and the company's weak financial performance, it may be wise for investors to exercise caution when considering investing in Lesha Industries.