MarketsMOJO downgrades Ashoka Buildcon to 'Hold' due to high debt and declining profits

Ashoka Buildcon, a smallcap company in the capital goods industry, has recently been downgraded to a 'Hold' by MarketsMOJO on April 15, 2024. This decision was based on various factors, including the company's high management efficiency with a ROCE of 27.04%. However, the stock is currently in a Mildly Bullish range and has multiple bullish indicators such as MACD, Bollinger Band, KST, and OBV.
One of the main reasons for the 'Hold' rating is the stock's attractive valuation with a ROCE of 44.2 and a 1.7 Enterprise value to Capital Employed. Additionally, the stock is currently trading at a discount compared to its average historical valuations. However, despite generating a return of 100.01% in the past year, the company's profits have fallen by -38.9%.

It is worth noting that Ashoka Buildcon has a high institutional holding of 24.24%, indicating that these investors have better resources and capabilities to analyze the company's fundamentals. In fact, their stake has increased by 1.31% in the previous quarter.

While the company has shown market-beating performance in the long term and near term, with a 100.01% return in the last year and outperforming BSE 500 in the last 3 years, 1 year, and 3 months, it is also important to consider its high debt. With a Debt to Equity ratio (avg) of 8.48 times, Ashoka Buildcon is a high debt company.

In terms of recent financial results, the company's profits have fallen by -21.2% in the quarter ending December 2023, with a PAT(Q) of Rs 107.30 crore. Additionally, its cash and cash equivalents (HY) are at their lowest at Rs 347.47 crore.

Overall, while Ashoka Buildcon has shown strong management efficiency and market-beating performance, its high debt and recent decline in profits may have contributed to the 'Hold' rating by MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.