MarketsMOJO Downgrades Asian Granito India to 'Sell' Due to Weak Fundamentals and Debt Concerns

Asian Granito India, a microcap company in the ceramics and allied industry, has recently received a 'Sell' rating from MarketsMOJO on August 8, 2024. This downgrade is based on the company's weak long-term fundamental strength, with a -197.91% CAGR growth in operating profits over the last 5 years. Additionally, the company's ability to service its debt is also a concern, with a poor EBIT to Interest (avg) ratio of 1.51.
In terms of recent financial performance, the company's results for June 2024 were flat, with the lowest operating cash flow of Rs -82.44 crore and a 38.02% increase in interest expenses. These factors contribute to the 'Sell' rating on the stock.

On a positive note, the stock is currently in a mildly bullish range and has multiple bullish indicators such as MACD, KST, and OBV. It also has a very attractive valuation with a ROCE of 0.3 and an enterprise value to capital employed ratio of 0.8. Furthermore, the stock is currently trading at a discount compared to its average historical valuations.

Despite the recent downgrade, the stock has shown market-beating performance, generating a return of 55.01% in the last year, compared to the market (BSE 500) return of 33.41%. However, it is important to note that the company's profits have only risen by 89.1% during this period, indicating low profitability per unit of shareholders' funds.

In conclusion, while Asian Granito India may have shown strong market performance in the past year, its weak long-term fundamentals and debt-servicing ability warrant a 'Sell' rating from MarketsMOJO. Investors should carefully consider these factors before making any investment decisions.