MarketsMOJO downgrades Ajmera Realty & Infra India to 'Sell' due to weak fundamentals and high debt levels

Ajmera Realty & Infra India, a smallcap company in the construction and real estate industry, has recently been downgraded to a 'Sell' by MarketsMOJO on October 7th, 2024. This decision was based on several factors, including weak long-term fundamental strength, low ability to service debt, and low profitability per unit of shareholders' funds.
One of the main reasons for the downgrade is the company's -3.33% CAGR growth in operating profits over the last 5 years. This indicates a lack of consistent growth and stability in the company's financial performance. Additionally, the company has a high debt to EBITDA ratio of 6.75 times, which raises concerns about its ability to manage its debt.

Furthermore, despite its size, domestic mutual funds hold only 0% of the company, which could suggest that they are not comfortable with the company's current price or business. On the other hand, the company has shown positive results in the last 3 consecutive quarters, with a growth in operating profit of 72.32% in June 2024.

The technical trend for the stock is currently sideways, indicating no clear price momentum. It has also deteriorated from mildly bullish on October 7th, 2024, generating -6.36% returns since then. However, the company has a fair valuation with a ROCE of 12.9 and a 1.8 enterprise value to capital employed.

Despite the recent downgrade, Ajmera Realty & Infra India has shown market-beating performance, generating a return of 56.42% in the last year, much higher than the market (BSE 500) returns of 33.39%. However, it is important to note that while the stock has seen a significant increase in returns, its profits have only risen by 39.8%, resulting in a PEG ratio of 0.5.

In conclusion, while Ajmera Realty & Infra India has shown positive results in the last few quarters, its weak long-term fundamental strength and high debt levels have led to a 'Sell' rating from MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.