Manaksia Coated Metals & Industries downgraded to 'Sell' by MarketsMOJO due to weak fundamentals and high debt

Manaksia Coated Metals & Industries, a microcap engineering company, has recently been downgraded to a 'Sell' by MarketsMOJO on 2024-08-26. This decision was based on the company's weak long-term fundamental strength, with an average Return on Capital Employed (ROCE) of 8.64%. Additionally, the company has a high Debt to EBITDA ratio of 4.53 times, indicating a low ability to service debt.
Despite declaring positive results for the last 3 consecutive quarters, with a PAT (HY) of Rs 8.04 crore and a growth of 106.10%, and PBT LESS OI (Q) of Rs 2.43 crore and a growth of 80.7%, the company's overall ROCE (HY) is at its highest at 14.45%. However, the stock is currently in a mildly bullish range, with multiple factors such as MACD, KST, and OBV showing bullish signals.

At a ROCE of 12.4, the stock is fairly valued with a 2.1 Enterprise value to Capital Employed. It is also trading at a discount compared to its average historical valuations. Despite generating a return of 239.96% in the past year, the company's profits have only risen by 190.7%, resulting in a PEG ratio of 0.2.

The majority shareholders of Manaksia Coated Metals & Industries are the promoters, indicating their confidence in the company's performance. The stock has also outperformed the market (BSE 500) with a return of 239.96% in the last year, compared to the market's return of 39.36%. However, considering the company's weak fundamental strength and high debt, MarketsMOJO has downgraded the stock to a 'Sell'.